Innovation Strategy- India and UK: Wish list Vs Pragmatism

The draft Science, Technology, and Innovation Policy, 2020 is a non-starter as a policy on innovation and went into a limbo. When authorities try to give a new avatar the team can benefit from UK policy paper `UK Innovation Strategy: leading the future by creating it'

A recap of India's draft:

Broad vision- To double the number of Full-Time Equivalent (FTE) researchers, Gross Dimestic Expenditture on R&D (GERD) and private sector contribution to the GERD every 5 years. Open Data Policy for Publicly Funded Research: All data used in and generated from public-funded research will be available to everyone (larger scientific community and public) under FAIR3 (findable, accessible, interoperable and reusable) terms. Wherever applicable, exceptions will be made on grounds of privacy, national security and Intellectual Property Rights (IPR). Transforming existing R&D institutions to research universities. This will foster better linkages between research and education and also enable effective utilization of research infrastructure. Foreign MultiNational Companies (MNCs): Foreign MNCs play an integral role in boosting India’s economy. To gainfully measure and assess the contributions made by foreign MNCs in the STI financing landscape, innovative methods to capture them will be developed. Boosting fiscal incentives for industries investing in STI through incremental R&D based tax incentives, tax credit for investing in facilities for commercialization, tax holidays, tax waivers, target-based tax incentive for specific domains, tax deduction, expatriate tax regimes, remodelling of patent box regime etc. There will be a reassessment of the possibility of reviving weighted deduction provisions (of expenditure incurred on in-house R&D).Flexible mechanism for supplier development programmes for public procurement in all sectors (especially earmarked for Small & Medium Enterprises - SMEs and Start-ups).Reassessment of regulatory control on STI landscape to promote innovative enterprises. It is recommended that the Central Government re-examine and widen the scope of R&D expenditure. Further, the government may determine the right mix of loan, equity and grants to assist Indian industries for technology up-gradation and commercialization. Further, to attract Foreign Direct Investment (FDI) in STI, reduction in corporate tax rates for foreign MNCs, fast track clearances, easing land acquisitions, adequate means for incorporating FDI etc. will be explored on a need basis. To undertake efficient governing mechanisms for the STI funding landscape, a national STI Financing Authority will be created.Modification/waiver of General Financial Rules, for large scale mission mode programmes and projects of national importance will be explored. A new model for funding, implementation and monitoring of such programmes will be developed, either as an overarching mechanism or through obtaining cabinet approvals in respect of individual programmes. In addition, certain GFRs will be required to be amended for funding of R&D projects to facilitate ease of doing research.

Summery: A great compilation of wish list. There is something for every stakeholder.  STI Financing Authority , modification/ waiver of GFR are radical proposals in Indian context.

UK Policy paper focus is comparitively narrow, pragmatic and more likely will be acted upon.  They talk of innovation by business which is diffrent from business innovation , favouraite of Unicorns.

Vision is for the UK to be a global hub for innovation. Strategy set out plans against 4 key pillars, which will support the achievement of that vision:

• Pillar 1: Unleashing business – we will fuel businesses who want to innovate
• Pillar 2: People - we will make the UK the most exciting place for innovation talent
• Pillar 3: Institutions and places - we will ensure our research, development and innovation institutions serve the needs of businesses and places across the UK
• Pillar 4: Missions and technologies – we will stimulate innovation to tackle major challenges faced by the UK and the world and drive capability in key technologies

Indian draft is for ease of doing research by government funded researchers of government funded institutes where as thrust of UK policy paper is on innovation by commercial enterprises.

UK Innovation Strategy- call of surge in Business led Innovation.

UK Government in its policy document UK Innovation Strategy: leading the future by creating it, terms innovation  as the “lifeblood of business” and sees procurement as a vital component of innovation. The document calls for surge in Buisness led Innovation with focus on public procurement, regulations and standards.

Read the strategy paper to understand how UK is planning to survive divorce from EU.

Dragon Multinational from Turkey- Arcelik

White goods industry collapsed in India after globalisation, how did the Turkish firm survive and prosper? Internationalisation and investment in R&D are two main reasons.

Internationalisation

Outward foreign direct investment (OFDI) enables both small and large MNEs to potentially enhance their competitiveness through securing access to new markets, technologies, brand names, resources and strategic assets abroad. In their constant search for better exploiting, consolidating and expanding their capabilities (or resource base), firms pursue a variety of strategies, which include product and technological diversification across fields and geographical sites . These potential enhancers of competitiveness would not be available to firms that elected to stay focused on their own domestic economy. Moreover firms that stay focused on the domestic market increasingly miss out on opportunities that are available only to firms that are prepared to internationalize – opportunities such as becoming integrated in global value chains or attracting global customers. In this paper -ACCELERATED INTERNATIONALIZATION BY EMERGING MULTINATIONALS: THE CASE OF WHITE GOODS- the authors document the rise of Haier, Mabe and Arçelik (from China, Mexico, and Turkey, respectively), as successful examples of latecomer firms that managed to upgrade their operations, evolving from the production of simple goods, generally as Original Equipment Manufacturer (OEM) subcontractors, into new product lines developed through their own design, branding and marketing capabilities.

Read : http://www.oecd.org/development/pgd/36317032.pdf

Arçelik was founded in 1955 to produce metal office furniture, and moved quickly into home appliances, manufacturing Turkey’s first washing machine in 1959 and first refrigerator in 1960. By the early 2000s it had seven production plants in Turkey to produce a complete range of home appliances.9 The company, producing 7.5 million units in 2004, is the leading firm in Turkey’s consumer durables, accounting for more than 53% of domestic sales and 54% of exports. A OEM contract in the United States was secured with Sears Roebuck in 1988 to supply refrigerators under the Kenmore name, followed a nine years later by a similar, but much larger, European deal with Whirlpool for dishwaters. Arcelik made major purchases of brands in 2002 – Blomberg (a subsidiary of Brandt) in Germany, Elektra Bregenz and Tirolia in Austria, and Leisure (cookers) and Flavel (appliances and TV sets) in Britain. In 2004 Arçelik acquired the brand name Grundig, after the German firm went bankrupt. (Arcelik had been an OEM supplier to it previously.)
 

Investment in R&D

R&D and innovation were examined in- The role of innovation in the effective international expansion of an emerging-country firm: The case of Arçelikby .

https://www.sciencedirect.com/science/article/pii/S1877042812008968

The impending entry into its largely protected domestic market of major foreign competitors once the Customs Union went into effect was another factor that necessitated quality improvements. The establishment of a Research and Development Center in 1991 appears to be the most critical decision pertaining to Arçelik’s strategy of international expansion. Arçelik A.Ş., which holds the most patent applications in Turkey, ranks 74th among 270 companies on the Global Patent Filings list published in 2017 by the World Intellectual Property Organization (WIPO). Today Arçelik A.Ş. owns one out of every three global patent applications submitted from Turkey.

Patent battles

Patent suits are inevitable part of global domination.  Arcelik, filed a case for patent infringement against South Korean appliances manufacturer LG Electronics and its subsidiaries in France and Germany. Arcelik claimed that LG Electronics used the Turkish firm's washing machine technology, named 'Direct Drive', in its devices under another name -- '6 motion'. LG filed a lawsuit against Arçelik and its German affiliates Beko Deutschland GmbH and Grundig Intermedia GmbH in connection with freezer door-ice making technology in LG Side-by-Side refrigerators. This was followed by infringement lawsuit against Beko Deutschland GmbH in Mannheim District Court in Germany for infringement of a patent for steam technology that protects certain garments from damage.

 

Providing space for local competence with a strategic perspective- China Vs India

Here is one more instance. 
Both China and India want Aircraft Carriers and both initiated the process by acquiring junked aircraft carriers from former Soviet block countries. India acquired Russian aircraft carrier Gorshkov at Rs 974 crores and spent another $2.9 billion to reequip it with imported missiles, systems etc. China acquired  one from Ukraine for stated purpose of running Casino and upgraded it mostly with Chinese make/ assembled products/ systems.