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7/28/2019 Innovation Deshpande
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Indianhigh-technolog
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Innovate or Perish
Vinay L Deshpande
Chairman & CEO, Enco re Software Ltd
India Emerging
Bangalore Management Association
10 September 2005
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Overtaking the G6When BRICs' US$GDP Would Exceed G6
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Overheard
Ind ia has always had a lot o f potent ial ;Bu t unless Ind ians wake up,
Ind ia w i l l cont inue
to only have po tent ia l!
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Did you know?
India is the largest producer of milk and sugar in theworld?
yet, Europe produces the largest amount of milkchocolate in the world!
India is the second largest producer of fruits andvegetables in the world?
yet, 40% of i t is w asted due to imp roper transpo rt andstorage!
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Networked Readiness IndexWorld Economic Forum -- over 90 factors considered
1. Number of Scientists & Engineers
2. Quality of Mathematics andScience
3. Quality of Scientific ResearchInstitutes
4. Foreign Technology Licensing5. Level of Technology Absorption
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Networked Readiness Index 2Numbers indicate rank among 102 countries
India has Thirdlargest resource of Scientists &
Engineers(after Finland and Japan)
Higher qual ityof Maths and Science Training(14) Better thanUS(37), UK(43), Germany(53), China(46)
High qual ityof Business Schools (8) (after US, France, Canada, Switzerland, UK, Finland, and Sweden)
Reasonably high s tandardof Sci ResearchInstitutions (20)
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Think about it
Yet, India has
A highrate of Foreign Technology Licensing (6)China: 70
A lowrate of Technology Absorption (31)China: 38
This is a ticket to DISASTER for our
Human Resources (Waste, Disenchantment)
Economy
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Think about it 2
BRAIN DRAIN ranking(based on percentage of populat ion th ata lmost a lways remains in ow n cou nt ry) 2 Finland
51 China
65 India
UTILITY PATENTS ranking 7 Finland
54 India
55 China
HIGH-TECH MANUFACTURED EXPORTS ranking 8 Finland
44 China
82 India
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The Only Way Out
INNOVATE OR PERISH!
E d t
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Encourage and nurtureInnovation
No innovation: economic growth limited
by physical resources available
to marginal returns on employed capital
Best way for any country to break out ofmarginal returns is Innovat ion.
e.g., US economy has bounced back in the pastfew years to very strong health, owing toInnovation.
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Priority One
Create
an
attitude for innovation
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India : Tech Leader or ?
Why is it that India is by far the least
innovative of all 'tech' countries? Howcan we say we will be the technology
superpower without innovatinganything? Is drudgery and grunt-workalone going to make India the 'TechChamp' of this world?
-- TechTree(e-zine), February 7, 2003
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But, Im Not Creative
Yes, you are. We allare.
We just need to think what others havenot thought
The task is not so much to see what no one hasyet seen, bu t to th ink w hat nobody h as yet
thought about that which everyone sees.Arthur Scho penhauer
Dont be afraid to stumble If out of 100 ideas, you get one that works,
that is enough!
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God dont make mistakes-- thats how he got to be God
(Archie Bunker)
Innovators do make mistakes lots of them
thats how they learn!
Thomas Edison 50,000 experiments to develop a newstorage battery!
We should not let past failures frighten us Follow the crowd and you will never be followed
by a crowd!
A person who walks in anothers tracks leaves no
footpr in ts Go against your own instincts sometimes
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Innovation in India
STD / ISD / PCO Booths
Uniquely Indian solut ion for u niquely Ind ian need
CHOIS
Internet access, too. 300 homes in Jamnagar
100,000 homes in the metros over the next fourmonths
50 million homes in two years!
Uniquely Ind ian solu t ion fo r uniquely Indian need
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Innovation in India 2
Godrej Electronic typewriters to Adler
C-DAC
GIST
PARAM
TVSe Tamil POS
Tejas Networks
State-of-the-art fibre-optic networking products
WeP Peripherals Entire profit on account of peripherals indigenized
through local design and innovation
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Innovation in India 3
Indica / RevaBoth on UK roads now
ASIEO
LCA Mission Computer
Dhru c, LCA , Saras
The Simputer Creat ing a new market
Selected b y Time magazine in June, 2002, as one ofthe Ten Technologies for You and the Planet
The Mobil isand SofComp
Affordable computers for everyday use
D t b di d b
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Dont be discouraged by
detractors
A certain portion of the populace will alwaysreject new ideas outright Early horseless carriagesyou cant get people to
sit over an explosion!
Others are willing to experiment, but lose faithor interest quickly when setbacks occur Mrs. Fish, in the 1900s
Visionaries are able to see past the problemsand appreciate the promise of new technologies Henry Ford: first handmade car $ 9,000
model T $ 800
eventually, $ 284,
built 15 million, changed America forever!
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Opportunities for India
High level of design expertise
Fast becoming the source for a range of chipdesigns
Fast growing domestic market
Availability of professional & skilled manpower
Experienced & enlightened leadership
NRIs in key positions in US companies
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Priority Two
Make
Design / Innovation / TechnologyKey elements of national strategy
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Design / Innovation / TechnologyKey elements of national strategy
Technology: tool for faster economic growth
No innovation: economic growth limited by physical resources available
to marginal returns on employed capital
Best way for any country to break out of marginalreturns is Innovat ion.
e.g., US economy has bounced back in the past few years tovery strong health, owing to Innovation.
C ti l M k t
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Conventional Marketsfor Indian IT Companies
Software services for foreign clients most of Indias software development effort goes
towards productivity and competitiveness
improvements of other countries -- USA, Europe,
Japan, etc
Domestic hardware and software sales
The unique needs of Indian society havebeen largely un-addressed.
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Time to be Unconventional
The task is not so much to see what no one has yet seen,but to th ink what nobo dy has yet thoug ht about that
which everyone sees.
Arthu r Schopenh auer
Time is now ripe for societal needs in India tobecome a new driver of markets for Indian IT
companies
Think laterally; think out-of-the-box
Unconventional thinking will generate strategy notin terms ofHardwareorsoftware, but so lu t ions.
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Facts to ponder over
USA: 70% of overall growth is through newproduct development
US companies spend more than $250 bneach year on R&D
Copyrighted material contributes more than$400 bn to the US economy and is theirsingle most important export
Compare ou r $17 bn of so ftware servicesexport w i th that !
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Priority Three
Initiatives for development of indigenoussolutions for product requirements
uniqu ely Indian productsforun iquely Ind ianneeds.
Advantage: Additional markets in the Third
World.
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Examples of Applications
HEALTH SERVICES
Foetal Monitoring (Portable Ultrasound)
Telemedicine
TelediagnosisTest samples collection and coordination
for remote areas
Clinical Decision Support System
Patients bedside clipboardHealth Statistics
More applications for the Indian
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More applications for the IndianMarket
Mobile banking Bank officials, customers thrilled with anyt ime,
anywherebanking
Crop data collection
Real-time data on standing crops feasible Time, Date, and GPS stamp
Health statistics collection
Time, Date, and GPS stamp
Electricity Billing
Ration-shop inventory control
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Priority Four
Facilitate
IPR Protection
The Age of
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The Age ofINTELLECTUAL PROPERTY
Aim to create IP rather than skinware
Develop products for local needs, keeping in view
the world as our market Design contracts
New products creation
Adaptation /Customization
G t h l
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Govt. can helpcreate large public markets
Individual project success: low probability
High need for interacting disciplines
Times to payoff: too long
The quest ion is not w hether government has a
role in foster ing innovation and wealth-creat ion,
but w here and how i t can par t ic ipate mo reeffect ively
US Government Support to Some
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US Government Support to SomeIndustries
Industry Examples & Modes of Current MarketGovernment Support Size ($ b)
1. Software Basic Maths research, military R&D,encryption, language standardization,military purchases of systems, IP
rights, interface standards >180
2. Computers Basic research, large-scale development,f i rs t purchase, software support,component development, mass-marketdevelopment through education >300
3. Semiconductors Materials research, f i rs t quant i typurchase, military research, Sematech,advanced system development, large-scale system deployments >150
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Public / Private Partnership
Mission mode projects tostimulate industry
Smart-card based multi-application Citizen Card
Electronic Commerce
Wireless Reconfigurable microprocessor chip
DNA chip
Biodiesel
Promote Industry-Academiapartnership
Uniquely Ind ian so lut ions for Uniqu ely Indian needs
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R&D for Defence / Public Sector
Commit production orders in addition to R&D
contracts for new IT products
IP must be given due recogni t ion
Government funded development projectsIPR first rights to developer
US examp le: NSF, NIH, DOA
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Recognition for IP
Encourage capitalization of IT productdevelopment expenses, and recognize them astrue assets (Intellectual Property)
Allow income-tax exemption on export revenuefrom royalty on IP
Preference in government procurement toindigenous-developed products.
Encourage financial institutions to finance credit-based product exports, against the sole security ofthe export goods
GOVT SUPPORT FOR
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GOVT. SUPPORT FORINNOVATION
RBI Rules Export receivables
Return of exported goods incompatible with DistributionChannels requirements (90 - 180 days credit; return ofunsold goods)
Simplify / Eliminate anachronistic provisions ofFERA/FEMA, RBI, Enforcement Directorate regulations.
Encourage financial institutions to finance credit-basedproduct exports, against the sole security of the exportgoods.
Facilitate local availability of input material(s) Permit stocking distributorships for imported components
Permit air-courier services to Be Customs- cleared at any metro ports.
Apply all CD exemptions available to EOU/EHTP/STP units.
GOVT SUPPORT FOR I T
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GOVT. SUPPORT FOR I.T.INNOVATION 2
Encourage development of appropriateinfrastructure
Permit stocking distributorships for importedcomponents
Permit air-courier services to carry samples, quick-turn-around PCBs, etc.
no insistence on customs clearance only at gatewayports.
all CD exemptions available to EOU/EHTP/STP units.
FINANCE FOR I T INNOVATION
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FINANCE FOR I.T. INNOVATION
The bank never gives you money when you need i t ,
and you dont need the bank when youve got the
money!
Is venture capital the answer?
Most Indian VCs are not very aggressive, yet.
GOVERNMENT MUST ASSUME THE ROLE OF ANAGGRESSIVE VC
Taiwan
Singapore Research / Development Grants for IT Product
Development
FINANCE FOR I T INNOVATION
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FINANCE FOR I.T. INNOVATION 2
Float a large VC Fund expressly for IT ProductDevelopment?
Collateral-free loans.
Low interest on such loans.
Encourage Exim Bank to give low-interestloans
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Priority Six
Encourage, FacilitateDesign-based
Manufacturing
Large-scale blue-collar employment
India : Manufacturing
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India : ManufacturingSuperpower?
Ind ia can and w i l l compete w ith developed
coun tr ies / Taiwan / Korea / China !
Not simply low-labour-cost manufacturing
Value addition through R&D/innovation
Design -based Manufactur in g
Rs. 50,000 crores Exports & 5,000,000 new jobs
Stimulus to the manufacture of products in India.
High Value-Addition
Wh t b d ?
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What can be done?
Encourage IT usage in Govt, business and education.
Think BIG! Allow unified manufacturing for exports/domestic markets;
economies of scale. Higher volumes pull down fixed and variable costs. Global + Local market
Low cost will allow access to lower end of domestic marketwhich is many times larger than the current premium market >>
higher volumes.
Enable an efficient supply chain Stable policies
Smooth procedures
Infrastructure
Improve the velocity of business Self declaration approach procedural not physical controls
Reduce transaction times at ports and increase the operating periods.
Flexible labour policy to manage global demand swings
Reduce paperwork and rules e-governance, avoid multifarious tax systems.
F d f th ht
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Food for thought
Value addition Move up the value chain; avoid becoming a
labour commodity.
Focus on Design and R&D activities and skill
building. Academia and industry to work together in
meeting global customer needs.
Short term focus - services (contract
manufacturing?) mid/long term focus products.
It i hi bl i i !!!
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It is an achievable vision !!!
the recipe for success is
Start believing in our ability to innovate Take risks and think BIG !!! Think out-of-the-box Uniquely Ind ian Solut ion s fo r Uniquely
Ind ian Needs Pride in Made in India >> Made in India,
with Pride
Vi i Y 2008
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Vision : Year 2008
India emerges as a true economicsuperpower.
Widen scope from local market to global
markets Entrepreneurs & medium corporates as
economic driving force
IT-driven national economy, educational
system, communications, and government-citizen interface
N Mi d t
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New Mindset
The greatest waste of our natural resources is thenumber of people who never achieve theirpotential.
Get out of that slow lane. Shift into the fast lane.
If you think you cant, you wont. If you think you
can, there is a good chance you will. Evenmaking the effort will make you feel like a newman.
Reputations are made by searching for things that
cant be done, and doing them Aim low : boring
Aim high : soaring!
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LETS AIM HIGH MAKE INDIA ANECONOMIC SUPERPOWER
OF THE WORLD
Thank you JAI HIND !
www.ncoretech.com