Technology & Entrepreneurship: India’s Roadway to Development
Date: Wednesday , September 30, 2009
Often, I’m asked about the state of ‘research’ in India. In spite of having one of the best educational institutes in the world, IIT, not much has come from India that can impact the world. Academic research has been the key driving force behind the innovations in the west. So why is it different in India? How can the academia contribute to the country’s growth? The first step can be taking lab research out to the market as a fully functional product. But what is developed in the labs is a prototype and cannot be mass manufactured; though it works for a few hours and suits academic observation but not the industry. The academicians need to work in collaboration with the industry and redesign the product to suit market needs. Though there are cadres of people here and there who have started implementing this, this academia-industry collaboration amounts to hardly one percent of faculty.
There also needs to be an increased academia-industry interface so that technology can be used more effectively to solve every day problems. When I had come back to India in 1981 after completing my masters from the U.S., I remember applying for a telephone connection for my home and I was told that it would take at least 8 years to get one. When I came across a similar response when I wanted to apply for an LPG gas connection, I thought, “If it took 8 years for the upper middle class to get a telephone then what about the middle class and those from the lower middle class and others. Being a part of one of the best institutes in the world and with the amount of funds that the institute has access to, we should fundamentally transform India.”
We at IIT-M started focusing on ways to get into the industry and see what their needs were and what we, as academicians, could contribute. During one such brainstorming sessions we came up with an idea called the ‘paanwala telephone’ to solve the telephone problems.
Almost every street in the country had, as it still has, a ‘paan’ shop and it was unique because it was open for almost 16 hours a day, 365 days a year. Why not put a telephone next to every such shop, which would be accessible within 50 meters of every house? When people make calls, the shopkeeper could have a part of the money charged. This is how the STD/PCO booths we have today at every street corner came into existence.
This initiative was launched within two years without much investment and we saw almost 700,000 STD/PCOs set up all across the country. This single-handedly revolutionized the telecom revenue. What is more, all of a sudden connecting to people within or across the cities became an affordable reality for ordinary middle class people.
This early stage entrepreneurship contributed significantly to the development of the nation. We also observed that though India was a very large market, if you tried to couple it with entrepreneurship, then it could really take off in a big way.
India is essentially a cost sensitive market. Hence, by implementing ideas from the west here just as they are will not work. One needs to redesign the product for the Indian audience and bring down the cost by a factor of 2-3. This is where innovation comes into play. I remember that in the mid eighties, shampoo was considered a product for the upper class. Then someone had an idea and introduced shampoo in sachets for Rs. 1-2 and it immediately became a household product for the middle and lower class people. Similarly, the ‘Nirma‘ detergent powder, which reached the consumers at the right price, broke the barrier and expanded the market rapidly to become a dominant force. Today, this is what Ratan Tata has proved with his NANO at a larger scale.
Observing this, the early learning we had was that entrepreneurship could contribute significantly to the country more than any thing else. If one can create enterprises that scaled for a countrywide reach, then one is very much contributing to the development of the nation. Over the years, I have seen several people in IT doing the same.
Many people that started entrepreneurship in IT have made a mark, but at the same time there are bottlenecks that have kept many others from flourishing. One such thing is the stringent and complex policies we have, which make any process complicated and time consuming. Two decades ago, when some of us at the IIT-M suggested buying a personal computer for our institute people discouraged, saying that the process would be too complex. Still, we approached our alumni to collect about $1,500 (that is what a PC cost in those days) and asked them to ship it to us. Though it reached India soon, it took us nearly one year to get it cleared from the custom department because of the difficult process.
Having experienced the problems such as those with the customs, we re-looked at the framework of several policies. For example, we opened up the telecom market for private investment. We also developed new technologies that helped bring down the capital expenditure and cost of operations, making telecom affordable in India.
Also, two decades ago, it was difficult to incubate companies in educational institutes because it was not considered their primary role. Educational institutes were supposed to focus only on the academia and research and not the business aspect of it.
But it is not so now. Students nowadays are very enthusiastic to create businesses around research. The government too has realized the importance of research and today it is funding research more liberally than the west. All wings of the government such as the Departments of Science and Technology, Industrial Research, Information Technology, and Biotechnology have started encouraging entrepreneurship and are granting funds to set up incubators in the institutes across the country. There is also a council being set up to monitor and evaluate research projects and fund the promising ones. A large number of incubators, close to 30-35, have already been set up and are also being supported by organizations like TiE and angel investors.
Now that the urban India has started aggregating wealth, the next focus has to be on rural India, which I feel can benefit from technology and entrepreneurship just the way urban India did a decade ago. In a step towards this, IIT-Madras has set up RTBI cell (Rural Technology and Business Incubator) that currently incubates close to seven companies that are working towards the development of rural India.
In the next 5-10 years, I see India surely making a significant mark in terms of innovation both within the country and at the global level.