India slips to 62nd rank in innovation: Report

India has slipped to 62nd position in the 2011 edition of the Global Innovation Index rankings from being 56th in 2010 and 41st in 2009.

The 2011 rankings were released on Thursday by the leading international business school INSEAD and its knowledge partners, Alcatel-Lucent, Booz & Company, the Confederation of Indian Industry, and the World Intellectual Property Organisation (WIPO).

Switzerland topped this year's list. The others in the top 5 are Sweden, Singapore, Hong Kong and Finland. The other major countries are; US (7), China (29), Brazil (47) and Russia (56).

The Global Innovation Index is computed as an average of the scores across inputs pillars (describing the enabling environment for innovation) and output pillars (measuring actual achievements in innovation), a WIPO statement said. It added that five pillars constitute the Innovation Input Sub-Index: ‘Institutions,' ‘Human capital and research,' ‘Infrastructure', ‘Market sophistication' and ‘Business sophistication'.

The Innovation Output Sub-Index is composed of two pillars: ‘Scientific outputs' and ‘Creative outputs'. The Innovation Efficiency Index, calculated as the ratio of the two Sub-Indices, examines how economies leverage their enabling environments to stimulate innovation results.

India with its 62nd rank topped the South Asia regional rankings. It was followed by Sri Lanka (82), Bangladesh (97), and Pakistan (105).

India is also 8th in its income group (lower-middle-income countries) – after China, Moldova, Jordan, Thailand, Vietnam, Ukraine, and Guyana.

India comes in at 44th on the Output Sub-Index, within the top 30 on labour productivity growth (21st with 4.5 per cent) and computer and communications services exports (4th globally, with 70 per cent of total commercial service exports).

It also has positions within the top 40 on two knowledge diffusion indicators: high-tech exports (32nd, at 6.34 per cent of GDP) and FDI net outflows (38th, at 1.08 per cent of GDP). On creative outputs, it ranks 39th on national feature films produced, 22nd on daily newspapers, 9th on creative goods exports, and 29th on creative services exports.

India's position, however, is dragged down by its poor performance on the Input side (ranked 87th): India is in the last quintile on sub-pillars business environment, elementary education, tertiary education, and knowledge workers.

But the country has high marks (within the top 40) on R&D (35th); general infrastructure (11th), a result driven by its 9th position on gross capital formation (at 35 per cent of GDP); and investment (15th), a result driven by a deep and dynamic stock market.

On innovation in India, the GII 2011 report said that big MNCs such as Microsoft, PepsiCo, IBM, Cisco, Nokia, GE, and Xerox as well as Indian major players such as Tata, Godrej, and Mahindras are shifting their focus towards the rapidly expanding middle-income group of customers by coming up with frugal innovations, keeping in mind the price sensitivity of Indian consumers.

“A trend of ‘reverse innovation' has set in, where an innovation is developed and/or adopted first in the developing world and then deployed in mature markets,” it said.

The report termed ‘reverse innovation' as an interesting trend that is bringing a whole new meaning and perspective to innovation, transforming traditional innovation into something new.

“Indian resourcefulness is embodied in the Hindi word jugaad — to find an effective solution, even if it is makeshift and short-term,” it said.

This approach, although not innovation in the true sense but rather an inspired adaptation of existing solutions using low-cost technology, is a phenomena that emerging markets such as the BRIIC countries (Brazil, Russia, India, Indonesia, and China) are increasingly exhibiting, the report said.