Innovate or perish

Innovate or perish

by S N Chary


The tell-tale signs were already there. The recent figures on India’s industrial output showing a significant overall dip was not shocking news.

Whenever such hurtful news is received, the reactions are common: The government’s industrial policy is flawed, the manufacturing policy had been non-existent until very recently, the Reserve Bank’s monetary policies are highly restrictive of borrowing and investment, the domestic market has been slowing down, the foreign markets of the European Union and the US have fallen drastically slowing down our export activity, and rupee has dipped in value internationally. These are all numerous and predictable reasons under such circumstances.

However, the one fact that often slips from being mentioned is that India’s industrial competitiveness has been dropping. And that was not any recent news. It has been very low for several years now. It took some time for the nation to feel its repercussions. It was a major fault-line and some seismic activity was to be expected now or a little later.

Unido’s report prepared not long ago puts India at 41st rank in terms of industrial competitiveness, far behind China. But, even China is 26th in the rankings and several other countries, about whom Indians generally tend not to hear much, like Ireland, Slovenia, Finland, Belgium and Austria make the top 15 cut.

Singapore, known to Indians for its financial services might and less known to us for its industrial prowess, makes it to the top i.e. 1st position in these rankings. Malaysia is ranked 18; Canada is ranked at 22, Malta at 23, Mexico at 30, and Brazil at 39. Mexico and Brazil have taken to manufacturing in a big way and are the recent powerhouses of industrial activity. In fact, after China, these two Latin American nations seem to be the contenders in global manufacturing.

It is true that the present government at the Centre has not been able to function well for quite some time. Parliament is in a series of log-jams. UPA government is caught up in several alleged scandals involving its own members. Anna Hazare’s agitation is close on its heels. There are accusations – coming from Indian industry’s captains -- of a serious governance deficit on the part of the Centre. It is also true that RBI’s tightening of the credit lines has made investments that much more difficult for the industry.

But, all that is akin to putting the entire blame on someone else. Indian industry has not been looking inside its own house. This is, of course, an Indian habit of seldom indulging in introspection. If it is corruption, we do not first check ourselves; if it is a fall in industrial production, we do not check where we have been going wrong.

Vision of our leaders

It cannot be denied that India has an industrial base – that too in multifarious industries – thanks largely to the vision of our leaders in the early days after independence. Post the more-or-less forced liberalisation, we have taken advantage of the global market opportunities for cheap and less value-added services. We have produced diverse products for our domestic consumption from pins to planes, fertilisers to fine chemicals, and lamps to industrial lathes. But, none of the products and services made the top cut. None of these is a global brand.

We make good items of daily use, but these are nowhere near the internationally known brands. In fact, one is pained to see them abroad heaped in a basket of cut-priced items for sale. We make good textiles, but again most of these are to be found in stores that sell cheap wares or in some corner of a store. We do not make either machines, tools, large equipment, consumer durables, chemicals, biochemicals, or agricultural or horticultural items that have any international name or appeal. Our products are good enough for us, but not for the world at large. To be internationally competitive, one has to be not just good but be better, preferably be the best.

If we specialise in say being a BPO of the world, we must be the best BPO country. There cannot be any scope for an Ireland or Philippines or Poland to overtake us. If we are to be the software giants, we must be the best in writing new software and coming up regularly with new software products. If we are to be the best in bio-tech products, we must invent new biotechnogical products. This is true of all our industries. We cannot even afford to be the second rung. We certainly cannot be ‘also ran,’ which is what we have been doing starting from screws to ship-making.

Indian industry, whether it is the bricks-and-mortar old economy kind or the new sun-rise economy type, has been wary of research and innovation. Again, this has so far been a particularly Indian business trait of risk avoidance. Innovation is about going on a search for a new path. It is risk-laden. The results, if reaped, can only be available for the future, currently unknown. It is not about putting money today and getting rewards the very next day. The entire thought process has been short-term.

The industry that accuses the government of not planning enough for the future is itself quite myopic. Value addition, innovation and constant improvement are the mantras. Without these basics, an industry will always be on a flimsy foundation to be shaken up with every international or domestic tremor.

Moreover, why does the industry wait for help to arrive from the governmental quarters? Why should it always expect largesse in the form of incentives, tax breaks, import curbs, cheap land, easy credit, or in some cases even a bail-out? Self-help is the best help. It is the sign of a mature industry.

(The writer is a former professor at IIM, Bangalore)

source:Deccan Herald