Innovating for Emerging Markets
Date: Monday , January 11, 2010
A few decades ago, India was seen as a producer of finished goods for the international market, or if we put it bluntly, we were seen as a dumping ground for products from the developed countries. A pretty sad scenario as we used to import more and our exports were frugal. Barring agriculture and spices, we did not have much to rave about.
However, a change in mindset of the authorities has paved the path towards progress. India’s economic growth has prospered over the years, thanks largely to the opening of markets to foreign companies and investors, which has ushered a very healthy and competitive environment. This trend started way back in the early 90s, where liberalisation, privatisation and globalisation policy of 1991 opened up new horizons of opportunities for Indian business to take shape firmly and be equally competent in the world market.
As a result, India has progressed quite well in terms of technological innovation and has managed to produce high-tech products and services. In a way, we are world leaders, when it comes to providing solutions, as more or less, every software product or service that comes out has a “made in India” tag to it. It definitely makes us feel proud as we are one of the top contributors to the global economy. But, somewhere in this melee, we are underperforming to our true innovation potential—this somehow has affected our industrial competitiveness and economic growth. There is no specific answer to this anomaly as India is a very large and diversified country.
For building a resurgent India, we need good infrastructure, better governance and overall good policies which have to be implemented in the right earnest. Due to lack of coordination amongst the various bodies, development has not reached to the far flung rural areas, the perpetual problem of location, language, culture, literacy levels, incomes, and so on, has kept the country on tenterhooks. Most of the development is in the larger metros and the rural areas have still a long way to catch up. In order to sustain the current growth rate and even to surpass it, India needs to aggressively harness its innovation potential, relying on effective long term policies which would help us achieve true economic and social transformation.
Time to Innovate
Though we are an agrarian economy it is now time to shift gears and chart out a new path. This path is ideally through use of Information and Communication Technologies (ICT). Studies have shown that a 10 percent increase in mobile-phone adoption in an emerging market can increase GDP per person by 0.8 percent. The IT revolution in the last decade, has earned us the much needed foreign exchange for our country. Our knowledge quotient has placed us amongst the top innovating countries. The robust growth of Indian firms can be attributed to the meteoritic success of ‘India IT Industry’. In fact, no other Indian industry has performed so well vis-à-vis the global market. The IT sector alone has contributed to 7.5 percent of the overall GDP and is likely to attract Foreign Direct Investment (FDI) of $4-5 billion. Therefore, the way ahead is to channelise these resources for the betterment of society.
When one wants to innovate for India, it is important to realize that the Indian market comes in many flavors. At one extreme, it is still a developing nation with gaps in infrastructure (transportation, utilities, connectivity, and many more), low per capita income, and less than 100 percent literacy rates. On the other extreme, India is also the “Asian Tiger” – a technology and economic superpower, with a massive upward-looking middle class, large youth population with access to quality technical education, and a mobile market that is adding over 11million subscribers every month. Both these flavors of India require unique innovations distinct from the products created for the developed nations because many of the problems they pose have very different requirements in cost, scalability, ease-of-use, and customizability to multiple demographics varying in language, literacy levels and cultures. In the rest of the article, we will look at broad-reaching innovations that start to address these different parts of the spectrum.
Let us take one step at a time. Most of us spend our time commuting to work and back. For example, 120,669 units of cars were added on the Indian roads in the month of August 2009 leading to the already congested traffic as the infrastructure just cannot handle anymore. One option could be to restrict entry of private vehicles at certain points of time or altogether force a ban on purchase of new vehicles as it is done in some countries. This would require political will and is different story altogether. So, let’s focus on the technological aspect and see how it can ease our daily commute.
In many developed countries, there is a concept of ‘smart roads’, where traffic is monitored on a regular basis using an array of sensors. Several companies in India are working on this concept, but providing a much more affordable solution using the combined power of sensors, wireless communications, computing power and the Internet. These sensors identify and track devices through short range communications like radios and Bluetooth present in cell phones. Through these, engineers are able to accurately predict the travel time and the amount of traffic on a particular route and alert oncoming traffic of any problem whatsoever. In short, if you are traveling from point ‘A’ to point ‘B’, then the traffic management system or ‘smart roads’ application would guide you effectively by suggesting the best possible route. India’s cities are in dire need of such efficient systems.
Going a Step Further
To ensure seamless connectivity, we need to optimise major information networks by creating robust ICT backbone architecture, which would effectively reduce running costs and ultimately broaden network access. This includes solving the last 20km problem of connecting villages to the nearest fiber drop at a very low cost. Again, solutions that worked well in the West – like Copper and optical fiber access – may not be economically feasible in India and one needs innovative alternatives like long-range WiFi.
The telecom revolution is making life a lot easier for villages and one of the best services to address their needs is e-learning. This can be a boon for village folk as they need not travel long distances to attend schools or colleges. Likewise, the Smart card is another feasible option in providing access to a world of opportunity for the rural folk as through its use the rural community can access many an application – microfinance being one of them. And when we talk about telecom; mobile telephony is definitely going to influence the rural landscape. The concept of mobile banking and payment services have already reached good number of villages in the country and within some years we can see our country connected entirely through mobile. Accordingly with superior technology and mass consumption of services the cost of operating telecom circles will come down considerably this would usher in a true mobile revolution.
The advantage that India has over other developing countries is that we have a young population/task force well versed in English language and are also major contributors to world economy. The IT industry that so far has been the main stay of economy has led the economic revival and is the sector to watch. Accordingly, the IT enabled services (ITES) have provided job opportunities and will continue to do so. By far, the services sector in the country has benefited from the availability of vast skilled labour at competitive rates. And further in the coming years, India is expected to benefit further from the demographic dividend emanating from a higher proportion of the young population.
Likewise, in the present scenario, growth has also been fueled by increased local demand, backed by rising urban and rural incomes. One of the best success stories we can talk about is the launch of the ‘Tata Nano’ priced at one lakh rupees for every Indian. And when it comes to the telecom industry, India has made rapid progress in improving access to telecommunications services – though we may lag behind China and other countries we have definitely arrived. The top mobile operators continue to rope in millions of subscribers every month with innovative approaches and offers.
With the right kind of impetus, we can have good number of industries flourishing in the rural areas, which in turn would help in reducing the load on our cities. It would create the required number of jobs and provide the rural population with a sustainable livelihood plus make them tech-savvy in the process. Clearly, it is a win-win situation for everyone concerned.
The Road Ahead
On a positive note, we are on the path to progress. Many of the technological innovations are in place and are impacting our lives in many ways. We already have 3G technology deployed in many places and I am sure it will quickly become affordable and will be supported by large number of India-specific applications. Broadband has made its mark, and there are plans of WiMax in India, where one would be able to roam like never before. Moreover, location-based services will become commonplace, and India may leapfrog wireline DATA connections directly into wireless data connections.
So, the time to innovate for Indian market is now. We have excellent R&D centers, which need to be promoted on a larger scale. For this, a healthy Government-Industry participation is required as it is one of the key factors in enabling this major change. Moreover, one needs a disciplined approach along with a broader outlook from the policy makers. With a steady GDP growth, a growing middle class, and some very enterprising entities. in our midst, we could certainly be the “next ‘techno’ superpower”.
The author of the article is Viswanath Poosala (Vishy), the Head of Bell Labs - India, Alcatel-Lucent.