Product Innovation Gap: How Can Indian Companies Make For India

Indian companies have been making waves recently, with weekly announcements of ever-larger funding rounds, and newly minted unicorns. However, this exuberance masks the uncomfortable reality that technology-led product innovation (sometimes referred to as “deep tech”) is practically non-existent in India.

Product innovation is the creation of novel physical products through the application of new technology to address unmet, or sub-optimally met needs. It needs to be distinguished from business model innovation- where a new way of doing business generates value. Indian companies are yet to understand this.

Business Model Vs Product Innovation

Today, practically all entrepreneurial activity in Indian companies focuses on business model innovation, aiming to disrupt established (offline) business models with new (digital) business models. Food delivery, online shopping, travel bookings, etc. all fall in this category. The abundance of such ventures is in stark contrast to the handful of ventures working in deep tech and creating technologies and products that can truly impact lives.

Even in large Indian companies, we only see incremental product innovation, at best. We celebrate our success in making a better or cheaper ABC (stent, prosthetic, car, pharmaceutical, etc.). However, the ABC that we optimise has always been created and first developed elsewhere, mainly the West.

While such incremental innovation is incredibly important in increasing access and affordability of existing products, there are a host of Indian challenges that existing western products cannot meet- and these require indigenous product innovation.

Why India Lacks In Product Innovation?

In the US and Europe, the first half of the last century saw the golden age of technological innovation, leading to a plethora of new products in practically all areas. This early, fertile, and frenetic innovation and entrepreneurial activity matured into large corporations that today dominate sectors like agriculture, electrical goods, power, transport, pharmaceuticals; and product innovation increasingly became the domain of the large, faceless, corporate R&D group.

However, in some sectors like medical technology, entrepreneurial activity and startups still drive product innovation. There is a symbiotic relationship between large medtech companies and such startups, where the latter’s innovations are licensed, and marketed by the former.

In India (and the rest of the non-Western world), this organic process of technology innovation leading to patented products has not happened. And it is not for lack of innovative ideas.

A recent issue of The Economist carried an article on a novel road technology that incorporates recycled plastic. A British entrepreneur, who now is a world leader in plastic additives, saw road crews in India burning waste plastic in potholes along with tar. When he enquired about this, he learnt that plastic makes the road stronger.

The tragedy in this story is that the innovation was essentially India, however, it took a British entrepreneur to convert this innovation into a technology (through research in plastics), and into a patented commercial product.

Needless to say, all the economic value of the innovation is captured by this entrepreneur. Why did an Indian, maybe a road engineer, not convert this innovation into a product? A definite answer is impossible, but this inability to convert local innovations (or jugaad) into new technologies and patented products is a key gap that we must successfully address if we are to transform India for the better.

Sectors Product Innovation Is Possible

Such innovation is possible in many sectors such as healthcare, agriculture, automobile among others. Take agriculture, for instance. The agriculture technologies we use today were developed in the West in the early 1900s, for large farms, with the explicit goal of replacing animal labour.

These technologies may not be optimal for the tiny farms that exist in India today- which may be better served by a whole new set of technologies and products that are aligned to the small-holding farmer. Or take transport.

All the product innovation, little as it is, is seen in cars and in bikes- both western products. The quintessential Indian product, the auto rickshaw, has seen practically no innovation in the last 50 years. These and other areas such as water, waste management, construction, defence, are all ripe areas for needs-based, indigenous, innovation.

In Conclusion

The government seems to be aware of this lacunae. In recent years, hundreds of Atal Tinkering Labs have been set up at colleges, and the Atal Innovation Mission has funded setup of technology incubators in key Universities and public institutions.

This is a start, but a lot more needs to be done if India is to excel in product innovation. Not doing so would be a missed opportunity to improve millions of Indian lives – whereas succeeding in this would make India the leading product innovation hub for global emerging markets.