Indian Startup & Innovation Ecosystem

Manglesh Yadav & Naman Agrawal

Science and technology play a pivotal role in the development of a nation, be it economic, social, or holistic demographic development. India has one of the strongest networks of science and technology institutions and a sizeable pool of highly skilled workforce. India has been steadily rising in the Global Innovation Index (GII) rankings and is currently ranked 46th position. India is one of the youngest countries entering the next decade, with 64% of the population in the working-age group. MNCs like Samsung, Bosch, Microsoft, CISCO, etc. have turned their focus on India to leverage the capability we have to offer. This provides a huge opportunity for the young, ambitious, and increasingly educated youth to become job creators rather than being job seekers.

The world is changing and we as humans are learning to adapt with it but this would have been an impossible journey without the support of the growing startup ecosystem. Radical technological advancements are transforming the world and are giving rise to new innovations at an exponential rate. Electronics miniaturisation has enabled a computer which was of the size of a room to becoming hand-held. With the convergence of computing, storage, and communications at incredibly lower costs the miniatuarisation shall be even more transformational. Robotics and artificial intelligence are the driving forces of the next generation leading to higher productivity and efficient automation.

 With all this happening at such an incredible pace worldwide, what is it that we see missing in India today? May be a holistic innovation ecosystem which allows the cognitive capacity of our ever-growing workforce to express themselves as innovators and job creators. With over 1.35 billion people, close to a million schools, around 10,500 engineering establishments and a similar number of business schools, we need to ensure that the future generations are enabled and are able to realise their true potential and get opportunity to express and innovate.

We need to address issues such as the need to update curricula as per the growing industry requirements, communication skills and techniques to improve technical writing. We should also focus on institutional strategies to increase the visibility of research conducted by scientists and financing of entrepreneurial activities; to promote and create incentives for commercializing innovations which are worthy and promote talent which aims at socio-economic improvement of the society at large.

The Indian government has actively identified the policy gaps that exist in the industrial and innovation ecosystem and is implementing appropriate reforms to address and accelerate the growth of the ecosystem. The efforts can be seen bearing fruits as we see improvement in the Ease of Doing Business rankings. There have also been numerous Productivity Linked Incentives (PLI) schemes which have been rolled out in the last 18 months to provide acceleration to the manufacturing sector. All these and many more positive steps are being taken to ensure a leapfrog development of the Indian ecosystem.

India as the Innovation Nation: Gathering Momentum

The last few years have seen innovation in India reach a tipping point. The emergence of Indian unicorns along with their growing numbers has caused a huge participation in the startup ecosystem. India, as a country, is surrounded by challenges that demand innovative nonlinear solutions. The challenges to be addressed are intertwined and are related to poverty, education, healthcare, and the environment.

With the confluence of a unique demographic dividend where over 150 million students will be entering into the workforce over the next few years and one of the fastest growing major economies of the world; affordable, advanced, accessible technologies enabling rapid prototyping and deployment of innovations in every sphere of life will become a necessity. The Government of India is taking major steps to create and promote an ecosystem of innovation and entrepreneurship. One such significant intervention is the flagship initiative Atal Innovation Mission which focuses on building a culture of innovation to help transform a nation of job seekers to a nation of researchers, innovators, and job creators. Innovation plays a key role in the economic development of any nation, and the various technological changes contribute considerably to the development of developing economies.

Changing trends and challenges

·         Rapidly evolving ecosystem: Demands are rapidly evolving and with this is changing the tastes of the customer. This adds pressure on industries to be more focused on high growth and quick adaptability resulting in higher rates of acquisitions and restructuring.

·          Focus on futuristic deep techs: Incremental changes and innovations are not creating sustainable margins and hence to derive higher value and lead the competitive advantage, companies have had to focus more on their R&D, leading to research on application of next-gen technologies like genetic engineering, Internet of Things (IoT), 5G, quantum computing, etc. Startups have been a key generator of IPR (Intellectual Property Rights) in the last few years and are well poised to take on the future.

·         Digitisation and democratisation of information – As the penetration of digital technologies increase, a huge volume of data is being generated. Organisations are reinventing their business models with a need to deal with increasing data, maintaining transparency and dissemination of information through their value chain network along with capitalizing on the information available to create new bundle of products.

·         Requirement of specialised workforce – Science and technology is progressing exponentially creating new opportunities of growth every few years. The everchanging technological paradigm shifts the need for highly skilled workforce which is currently at a dearth. The cost of training individuals is growing but the solutions have started coming from a nascent startup ecosystem in the country and they believe in fail fast ideology. Impact of changing trends in the field of science and technology

·         Business: Business leaders in the last few years have started appreciating the existence of the startup ecosystem and have started challenging themselves to innovate relentlessly and continuously to keep up their numbers. Major conglomerates have introduced new product offerings trying to fulfil the existing and unserved demands by disrupting across the complete product value chain.

·         Government: Governments and regulators have learnt the knack of being updated with the changing innovation ecosystem and have started updating the regulations to accept the ever-changing ecosystem to attain worldwide competitive position. The added pressure of understanding the ecosystem and updating regulations does create a major challenge on some occasions but the promising journey has begun.

·         People: With technology being the driver for the future generation, the need for a check on the moral and ethical boundaries of the use of technology for providing better outcomes is an unanswered question. This does add some grey areas which will need to be checked.

The lifecycle approach to creating an innovative ecosystem:

Schools can create innovative, problem-solving leaders of the future and we need to ensure that we are able to create a sizeable number of entrepreneurs and innovators through the innovation initiatives of the country. The same can be done by establishment of the model followed by Atal Tinkering Labs and by the establishment of incubators in graduate colleges.

At the grassroots, a cultural shift in attitude towards entrepreneurship through education and awareness and through incentivization of relevant product innovations with commercial and social impact can go a long way in achieving the equity in the growing innovation ecosystem. This shall not only trigger and incentivise entrepreneurial thinking but also minimise the fear of risk-taking and risk management. Recognising this need, the Government of India has setup the Atal Innovation Mission (AIM) to promote a culture of innovation and entrepreneurship in the country. AIM's objective is to develop new programmes and policies for fostering innovation in different sectors of the economy, provide platform and collaboration opportunities for stakeholders, and create awareness and create an umbrella structure to oversee the innovation ecosystem of the country.

ATAL INNOVATION MISSION

Atal Innovation Mission has adopted a holistic framework to achieve its objective of creating a culture of innovation and entrepreneurship in the country. It is doing so by taking on a lifecycle approach of not only building an entrepreneur but also supporting them with the right institutional development and further grants-in-aid mechanism.

 In recent years, there is an increasing number of startups registration in the country owing to the success of a handful of unicorns that have been created but there is a huge potential in the country to create hundreds of such unicorns in the coming years. The conviction is because a solution catering to gaps existing in India is a solution for the world and hence there is greater need for institutions which can guide the startups to growth and prosperity while they fight sustenance is of utmost importance.

 Incubator is the go-to support mechanism in any developing startup ecosystem, the same is true for us but we still need to define the right model for ourselves. The base of any country’s growth lies in the ever-growing industrial revolution and the same can be made possible in India, if incubators and corporates tie up together to roll out the Industrial 4.0 Revolution. A model where incubators/ accelerators are feeder networks for corporates and corporates look at their startup ecosystem as their extended R&D arms. This is a model for a few incubators like the i-Hub, i-Create, T-Hub etc. All these have found their niche models and are excelling in their journey. With more than 100 smart cities, there is immense opportunity to build a sustain-able model of governance and startups working together to provide necessary services efficiently across the country.

Activities carried out under Atal Innovation Mission

Atal Innovation Mission (AIM), NITI Aayog, is Government of India’s flagship initiative to promote a culture of innovation and entrepreneurship in the country and was setup in 2016. Towards this end, AIM has taken a holistic approach to ensure creation of a problem-solving innovative mindset in schools and creating an ecosystem of entrepreneurship in universities, research institutions, private and MSME sector. All the initiatives of AIM are currently monitored and managed systematically using real-time MIS systems and dynamic dashboards.

1) Atal Tinkering Labs - at school level

Over the last 4 years, AIM has launched the Atal Tinkering Lab (ATL) program. ATL is a state-of-the-art space established in a school with a goal to foster curiosity and innovation in young minds, between grade 6th to 12th across the country through 21st century tools and technologies such as Internet of Things, 3D printing, rapid prototyping tools, robotics, miniaturized electronics, do it yourself kits and many more. The aim is to stimulate a problem-solving innovative mindset among children. Till date, AIM has selected 10,000 schools in over 680 districts of the country for the establishment of ATLs. More than 9000 schools are funded and over 2 million students have access to ATLs.

2) Atal Incubation Centres – at universities, institutions, industry

To promote creation of a supportive ecosystem for startups and entrepreneurs, AIM has been establishing world class incubators called Atal Incubation Centres (AICs) in universities, Institutions, corporate houses, etc. These AICs would foster world class innovative start-ups and help them become scalable and sustainable enterprises. To date, AIM has operationalized 68 Atal Incubations Centres with universities / institutions / private players and each of the AIC will foster creation and nurturing of 40-50 world class startups every four years. AIC supports startups by providing technological facilities and advices, initial growth funds, network and linkages, coworking spaces, lab facilities, mentoring and advisory support. They are often a good path to capital from angel investors, government organizations, economic development coalitions, venture capitalists and other investors. Till date, more than 2000 startups have been supported by these AICs, out of these more than 500 startups are women-led.

3) Atal Community Innovation Centres - serving the unserved and underserved regions of India

To promote the benefits of technology led innovation to the unserved/ underserved regions of India including Tier 2, Tier 3 cities, aspirational districts, tribal, hilly and coastal areas, AIM is setting up Atal Community Innovation Centres with a unique partnership driven model wherein AIM would grant upto Rs 2.5 crores to an ACIC subject to a partner proving equal or greater matching funding. 50+ ACICs will be established during the next two years.

4) Atal New India Challenges - Product and service innovations with national impact

To create product and service innovations having national socio-economic impact, AIM has launched over 24 Atal New India Challenges in partnership with five different ministries and departments of central government. 30 applicants were selected for grant in aid support and hand holding by incubators / mentors of AIM out of 950+ applications received for the same.

5) ARISE ANIC challenges - to stimulate startup/ MSME industry innovation

To promote innovation in a phased manner in the MSME/startup sector, AIM has launched 15 ARISE-ANIC challenges along with partner ministries (Ministry of Housing and Urban Affairs, Ministry of Health and Family Welfare, Indian Space Research Organisation, Ministry of Defence and Ministry of Food Processing Industries) to improve research capabilities in the startup and MSME ecosystem. As part of this, deserving ideas will be converted to viable innovative prototypes followed by product development and commercial deployment. 26 applicants have been selected for grantin-aid support and hand holding by incubators / mentors and are currently undergoing due diligence.

6) Mentor of Change (mentorship and partnerships - with public, private sector, NGOs, academia, institutions)

To enable all the initiatives to succeed, AIM has launched one of the largest mentor engagement and management program “Mentor India – The Mentors of Change.” To date, 5000+ MoCs have been allocated to ATLs and AICs to support the beneficiaries in their journey of spurring innovations.

Conclusion

The remarkable growth of the fast-growing 180+ billion dollar IT/ITES and biotech industry in India over the past decade has showed the world India’s scientific, engineering and technological prowess and capabilities. All the multinationals of the world are leveraging Indian talent and rushing to set up large R&D hubs in India. Aatmanirbhar Bharat has now turned the gaze of this world-class innovative talent inwards, to create products and services for the Indian market at par with other countries. Catalysing this stupendous potential are affordable, accessible, advanced IR 4.0 technologies, including 3D printing, IOT, AR/VR, biotech, cognitive computing, AI/Blockchain, to name a few. With one of the fastest-growing startup ecosystems—over 30,000 startups and 300+ incubators—India can surely position itself as one of the leading innovative nations of the world.

The time is ripe for microfinance and rural-financing schemes to spur great innovations and entrepreneurial initiatives on the socio-economic front. It is crucial to ensure gender equality, address economic disparity and equal opportunities for differently abled communities. Fastgrowing economies such as ours also need to be extremely wary of climate change related issues. Therefore, it is important that the Sustainable Development Goals remain the overarching objective of every organization.

Also, India has seen promising Private Equity /Venture Capital investments in the last few years and the trend has not stopped even as we have been fighting the Covid19 pandemic. The amount of Foreign Direct Investment inflow has been steady and has a big future ahead as the country grows and shall become the 5 trillion dollar economy soon.

All the investments have also led the Indian startup ecosystem go global and compete with the best providing us an opportunity to become a huge superpower soon. To summarise, India did catch up a little late in the industrial revolution that swept the world in the last century. But India does have a fantastic chance to contribute to the world in the knowledge-based revolution that is sweeping the world today. That is why AIM initiatives are so important and need to be embraced by all. The children and youth of the future deserve to realise the Vision of a New India by 2022. We all need to make it happen collectively.

(Manglesh Yadav is Program Director, Atal Innovation Mission, NITI Aayog and Naman Agrawal is Specialist, NITI Aayog.

Views expressed are personal).

 Image courtesy : oecd.org