S&T and Industry: Overview

Overview

The role of S&T for the industry of the country in the age of increasing returns must be novel. Industrial institutions developed over last six decades remained influenced by institutions under decreasing return. The complex of banking and financial institutions, stock markets, regulatory institutions and fiscal, legal or the executive and the managerial systems often celebrated structural models of industry that were expected to grow large. Contemporary concerns refer to sustainability, resources constraints, globalisation of resources, increased global control over commodities and increasing global cartel control over knowledge resources. Justifiably S&T for industry needs to take care of national security, inter-generational security and ecological sustainability, most importantly of generation of employment and wealth as well as its redistribution. The global dominance of market-based institutional approach is currently suspect; a degree of balance between complex wings of state political/executive control and market based institutions appear to be the preferred middle path. Market institutions, moreover, when under influences of very large incumbent corporations remain distorted. S&T is often expected to unleash the entrepreneurial bazaar of tiny industrial players that would, assisted by increasing returns knowledge institutions, upturn the applecart of large incumbents’ domination.

Post-WTO the distance between domestic and global markets has shrunk. S&T for industry thus needs to be politically strategic, taking into consideration the dynamics of globalisation and its imperatives, while formulating policies for small local domestic markets. The country’s S&T policies for XI^th Plan thus made innovation the central theme. Innovation in the knowledge-age of increasing returns demands the setting up of new policies, instruments, infrastructures and geographies, and especially of S&T capability as well as capacity. Last few years witnessed several policy departures and experienced the process of setting up of new mechanisms such as grants to R&D, restructuring funds, sector regulations, sector financing, skill development funds and similar other funds. In parallel large private incumbents from industry undertook more R&D; the small and medium units initiated productivity gaining innovations of non-R&D types. However, large unemployment, inefficient use of resources and less than desired expansion of domestic market in many sectors remained serious and Indian S&T for industry faces multiple tasks: care for the poorest multitudes especially in the rural areas through envisioning a sustainable development model of knowledge intensive resources-saving small centres of production; care for the high-tech ultra-rapid growth possibilities of increasing return industries; care for security of the country; and support gains in productivity in old industries.

The following description through coverage of multiple facets, bring out only certain saliencies. The challenge to the country is complex and Indian S&T system requires a very large boost in building up of capacity, capability and increasing-returns institutions. S&T would provide the most important resources to the industry of the near future.

In the following snapshots the description begins with a macro picture of three sectors and subsequently captures through input consumption scenario the innovative changes in Indian industry at the inter-sector level. The subsequent sections capture two major strands: the R&D based fiscal policy supported innovations, and, other policy supported non-R&D innovations in industries. Further down the pages, new instruments supportive of innovations such as the fund-based mechanisms and their successes have been captured. Still later narrations capture S&T in conjunctions with sectors of automobiles, biotechnology and pharmaceuticals, telecommunications, herbal, biomedical, energy and advanced materials.

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