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Science and technology in Indian industry
1.0 INTRODUCTION
Scientific and technological developments are often the subject of debate as far as their contribution to improving mankind’s lifestyle is concerned. Medical advancements, computers and simple inventions such as the light bulb are all examples of how science and technology is beneficial. It is self-evident that these scientific developments have made modern society what it is. Looking into the past, we can see all of the beneficial advancements we have made and how far we have come. Scientific and technological developments such as medical research to find a cure for AIDS, modern health care and computers are beneficial in the role of improving people's lives and do not come at the cost of undesirable changes. Science and technology have always been an integral part of Indian culture. Natural philosophy, as it was termed in those ancient times, was pursued vigorously at institutions of higher learning. The Indian Renaissance, which coincided with our independence struggle, at the dawn of 1900s witnessed great strides made by Indian scientists. This innate ability to perform creatively in science came to be backed with an institutional setup and strong state support after the country's independence in 1947. Since then, the Government of India has spared no effort to establish a modern S&T infrastructure in the country. As we enter 2020s, it is a focal point for development.
2.0 MINISTRY OF SCIENCE AND TECHNOLOGY
The Ministry of Science and Technology was established in 1971 to formulate science and technology policies and implement, identify, and promote "frontline" research throughout the science and technology infrastructure. The ministry, through its subordinate Department of Science and Technology, also coordinates intragovernmental and international cooperation and provides funding for domestic institutions and research programs. The Department of Scientific and Industrial Research, a technology transfer organization, and the Department of Biotechnology, which runs a number of developmental laboratories, are the ministry's other administrative elements. Indicative of the level of importance placed on science and technology is the fact that Prime Minister P.V. Narasimha Rao held the portfolio for this ministry in the early and mid-1990s. Some argued, however, that Rao could truly strengthen the sector by appointing, as his predecessors did, a chief science adviser and a committee of leading scientists to provide high-level advice and delegate the running of these ministries to others.
The National Council on Science and Technology is at the apex of the science and technology infrastructure and is chaired by the prime minister. The integration of science and technology planning with national socioeconomic planning is carried out by the Planning Commission. Scientific advisory committees in individual socioeconomic ministries formulate long-term programs and identify applicable technologies for their particular area of responsibility. The rest of the infrastructure has seven major components. The national-level component includes government organizations that provide hands-on research and development, such as the ministries of atomic energy and space, the Council of Scientific and Industrial Research (CSIR - a component of the Ministry of Science and Technology), and the Indian Council of Agricultural Research (ICAR). The second component, organizations that support research and development, includes the departments or ministries of biotechnology, nonconventional energy sources, ocean development, and science and technology.
The third-echelon component includes state government research and development agencies, which are usually involved with agriculture, animal husbandry, irrigation, public health, and the like and that also are part of the national infrastructure. The four other major components are the university system, private research organizations, public-sector research and development establishments, and research and development centers within private industries. Almost all internationally recognized university-level research is carried out in government-controlled or government-supported institutions. The results of government-sponsored research are transferred to public- and private-sector industries through the National Research and Development Corporation. This corporation is part of the Ministry of Science and Technology and has as its purpose the commercialization of scientific and technical know-how, the promotion of research through grants and loans, promotion of government and industry joint projects, and the export of Indian technology.
3.0 SCIENCE AND TECHNOLOGY POLICIES OF INDIA
Since independence, India has has made many resolutions on science and technology. The chief among them are Science Policy (1956), Technology Policy (1983), Science & Technology Policy (2003) and Science, Technology & Innovation Policy (2013).
Prime Minister Manmohan Singh declared 2010-20 as the "Decade of Innovations" and formed the National Innovation Council. The STI Policy 2013 is in furtherance of the declaration and aims to bring fresh perspectives to bear on innovation in the changing context.
The new Science and Technology Policy was unveiled in January 2013.
The STI Policy seeks to send a signal to the Indian scientific community, both in the private and public domain, that science, technology and innovation should focus on faster, sustainable and inclusive development of the people. The policy seeks to focus on both STI for people and people for STI. It aims to bring all the benefits of Science, Technology & Innovation to the national development and sustainable and more inclusive growth. It seeks the right sizing of the gross expenditure on research and development by encouraging and incentivizing private sector participation in R & D, technology and innovation activities.
The policy also seeks to trigger an ecosystem for innovative abilities to flourish by leveraging partnerships among diverse stakeholders and by encouraging and facilitating enterprises to invest in innovations. It also seeks to bring in mechanisms for achieving gender parity in STI activities and gaining global competitiveness in select technological areas through international cooperation and alliances. The policy goal is to accelerate the pace of discovery, diffusion and delivery of science led solutions for serving the aspirational goals of India for faster, sustainable and inclusive growth. A strong and viable Science, Research and Innovation System for High Technology led path for India (SRISHTI) are the goal for the STI policy. Sadly, by 2020, the new STP was yet awaited.
The key features of the STI policy 2013 were
- Promoting the spread of scientific temper amongst all sections of society
- Enhancing skills for applications of science among the young from all social sectors
- Making careers in science, research and innovation attractive enough for talented and bright minds
- Establishing world class infrastructure for R&D for gaining global leadership in some select frontier areas of science
- Positioning India among the top five global scientific powers by 2020(by increasing the share of global scientific publications from 3.5% to over 7% and quadrupling the number of papers in top 1% journals from the current levels)
- Linking contributions of Science Research and innovation system with the inclusive economic growth agenda and combining priorities of excellence and relevance
- Creating an environment for enhanced private sector participation in R &D
- Enabling conversion of R & D output with societal and commercial applications by replicating hitherto successful models, as well as establishing of new PPP structures
- Seeking S&T based high risk innovation through new mechanisms
- Fostering resource optimized cost-effective innovation across size and technology domains
- Triggering in the mindset & value systems to recognize respect and reward performances which create wealth from S&T derived knowledge and
- Creating a robust national innovation system
3.1 Aspirations of the Policy
The main aspirational elements of the STI policy were:
- Raising Gross Expenditure in Research and Development (GERD) to 2% from the present 1% of the GDP in this decade by encouraging enhanced private sector contribution
- Increasing the number of Full Time Equivalent (FTE) of R&D personnel in India by at least 66% of the present strength in 5 years
- Increasing accessibility, availability and affordability of innovations, especially for women, differently-abled and disadvantaged sections of society
3.2 Mechanisms
Wide ranging mechanisms were envisaged to be deployed to realize the policy aspirations.
- Promoting the spread of scientific temper amongst all sections of society
- Enhancing skill for applications of science among the young from all social strata
- Making careers in science, research and innovation attractive enough for talented and bright minds
- Empowering women through appropriate STI inputs and investments
- Facilitating private sector investment in R&D centres in India and overseas
- Promoting establishment of large R&D facilities in PPP mode with provisions for benefits sharing
- Permitting multi stakeholders participation in the Indian R&D system
- Treating R&D in the private sector at par with public institutions for availing public funds
- Bench marking of R&D funding mechanisms and patterns globally
- Aligning Venture Capital and Inclusion Innovation Fund systems
- Sharing of IPRs between inventors and investors
- Modifying IPR policy to provide for marching rights for social good when supported by public funds and for co-sharing IPRs generated under PPP
- Providing incentives for commercialization of innovations with focus on green manufacturing
- Closing gaps in the translation of new findings at the grassroots and the commercial space
- Forging strategic partnerships and alliances with other nations through both bilateral and multilateral cooperation in science, technology and innovation
- Triggering ecosystem changes in attitudes, mindset, values and governance systems of publicly funded institutions engaged in STI activities to recognize, respect and reward performances which create wealth from S&T derived knowledge
3.3 Policy implementation
Implementation of the proposals contained in the Policy will necessitate consultations with different government departments/ministries and agencies besides consultations with overarching, science and engineering academies industry and business associations etc. Accordingly, DST will establish a Policy Implementation Group to expeditiously operationalise the proposals within the next two years.
4.0 GOVERNMENT INVESTEMENT IN S&T
5.0 TECHNOLOGY TRANSFERS
Technology transfer is the process of sharing of skills, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then further develop and exploit the technology into new products, processes, applications, materials or services.
By opening of the Indian economy (LPG policies-1991), several Indian companies are poised for different types of financial, technical and other forms of collaborations. Though they enter with proper technology transfer agreements, some are not successful with different reasons. Government of India's Ministry of Scientific and Industrial Research is playing a vital role through its technology transfer policy in both inward and outwards technology transfers to the Indian companies through automatic route and some are through project approval board (PAB). The ability of the country to use technology transfers to develop their domestic capabilities to reap the social and economic benefits have been very mixed. This paper explores the important issues involved in the technology transfer besides the scope of technology transfer disputes and the promotion and regulation of technology transfer in India.
Generally, there are two ways of acquiring technology. It can be developed through own research and development or it can be purchased through indigenous or imported sources. India has opted for a judicious mix of indigenous and imported technology. Purchase of technology is commonly called 'Technology Transfer' and it is generally covered by a technology transfer agreement.
However, the following siputes may arise out of technology transfers
- Disputes relating payment of royalty and fees
- Delay in completion of the projects
- Passing of unapproved technology
- Technology up gradation and incomplete data and drawings
- Licensor is competing with licensee with the latest models in India
- After sales service and backup
- Intellectual Property Rights (IPR) issues like of trade mark
- Quality and cost of production,
- Delay and supply of inferior raw materials and components
5.1 Technology transfer aids in the following
Increase in physical stock of productive and innovative resources.
Further exploitation of economical resources
- natural resources
- manpower
- innovation
- physical resources
Productivity increase
- labour
- capital
- natural resources
- innovation capacity
6.0 NATIONAL MANUFACTURING POLICY
The Government of India announced a national manufacturing policy in 2011 with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs. It also seeks to empower rural youth by imparting necessary skill sets to make them employable. Sustainable development is integral to the spirit of the policy and technological value addition in manufacturing has received special focus.
Government of India decided to bring out the National Manufacturing Policy to bring about a quantitative and qualitative change with the following six objectives:
- Increase manufacturing sector growth to 12-14% over the medium term to make it the engine of growth for the economy. The 2 to 4 % differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25% of the National GDP by 2022.
- Increase the rate of job creation in manufacturing to create 100 million additional jobs by 2022.
- Creation of appropriate skill sets among the rural migrant and urban poor to make growth inclusive.
- Increase domestic value addition and technological depth in manufacturing.
- Enhance global competitiveness of Indian manufacturing through appropriate policy support.
- Ensure sustainability of growth, particularly with regard to the environment including energy efficiency, optimal utilization of natural resources and restoration of damaged/ degraded eco-systems.
In order to achieve these goals
- Foreign investments and technologies will be welcomed while leveraging the country's expanding market for manufactured goods to induce the building of more manufacturing capabilities and technologies within the country
- Competitiveness of enterprises in the country will be the guiding principle
- in the design and implementation of policies and programmes
- Compliance burden on industry arising out of procedural and regulatory formalities will be reduced through rationalization of business regulations
- Innovation will be encouraged for augmenting productivity, quality, and growth of enterprises and
- Effective consultative mechanism with all stake holders will be instituted to ensure mid-course corrections.
The following industry verticals will be given special attention
- Employment intensive industries: Adequate support will be given to promote and strengthen employment intensive industries to ensure job creation. Special attention will be given in respect of textiles and garments; leather and footwear; gems and jewellery; and food processing industries.
- Capital Goods: A robust economic growth would necessitate a strong demand for capital goods. Such growth would create a strong and continuing demand for capital goods. The capital goods industry, which is the mother industry for manufacturing has not grown at the desired pace. A special focus will be given to machine tools; heavy electrical equipments; heavy transport, earth moving and mining equipments.
Time bound programmes will be initiated for building strong capacities with R&D facilities and also to encourage growth and development of these capacities in the private sector while strategically strengthening the public sector to complement the private initiatives where essential.
- Industries with strategic significance: A strategic requirement of the country would warrant the launch of programmes to build national capabilities to make India a major force in sectors like aerospace; shipping; IT hardware and electronics; telecommunication equipment; defence equipment; and solar energy. Mission mode projects will be conceptualised in each of these sectors, recognizing the fact that a mission on solar energy has already been launched under the National Action Plan on Climate Change.
- Industries where India enjoys a competitive advantage: India's large domestic market coupled with a strong engineering base has created indigenous expertise and cost effective manufacturing in automobiles; pharmaceuticals; and medical equipment. The concerned ministries will be formulating special programmes to consolidate strong industry base to retain the global leadership position.
- Small and Medium Enterprises: The SME sector contributes about 45% to the manufacturing output, 40% of the total exports, and offers employment opportunities both for self-employment and jobs, across diverse geographies. A healthy rate of growth shall be ensured for the overall growth of the manufacturing sector as also the national economy by policy interventions in areas like manufacturing management, including accelerated adoption of Information technology; skill development; access to capital; marketing; procedural simplification and governance reform. The National Manufacturing Competitiveness Programme, being implemented by M/o MSME will be strengthened, and the recommendations of Task Force on MSME for creation of a separate fund with SIDBI, strengthening of NSIC, modification of lending norms and inclusion of lending to MSMEs under priority sector' lending will be given due regard in taking appropriate measures.
- Public Sector Enterprises: Public Sector Undertakings, especially those in Defence and Energy sectors, continue to play a major role in the growth of manufacturing as well as of the national economy. A suitable policy framework will be formulated in this regard to make PSUs competitive while ensuring functional autonomy.
Specific policy instruments have been conceptualized to achieve the objectives stated above. These instruments which are outlined in greater detail in Part-B of the Policy document broadly cover the following areas:
- Rationalization and simplification of business regulations
- Simple and expeditious exit mechanism for closure of sick units while protecting labour interests
- Financial and institutional mechanisms for technology development, including green technologies
- Industrial training and skill up gradation measures
- Incentives for SMEs
- Special Focus Sectors
- Leveraging infrastructure deficit and government procurement - including defence
- Clustering and aggregation : National Investment and Manufacturing Zones (NIMZs) and
- Trade Policy
7.0 National INVESTMENT Manufacturing Zone (NIMZ)
The National Investment and Manufacturing Zones (NIMZs) were to be developed as integrated industrial townships with state-of-the art infrastructure and land use on the basis of zoning; clean and energy efficient technology; necessary social infrastructure; skill development facilities, etc., to provide a productive environment to persons transitioning from the primary sector to the secondary and tertiary sectors. These NIMZs were to be managed by SPVs which would ensure master planning of the Zone; pre-clearances for setting up the industrial units to be located within the zone and undertake such other functions as specified in the various sections of this policy. To enable the NIMZ to function as a self governing and autonomous body, it will be declared by the State Government as an Industrial Township under Art 243 Q(c) of the Constitution. In sum, the NIMZs is meant to be large areas of developed land, with the requisite eco-system for promoting world class manufacturing activity. They would be different from SEZs in terms of size, level of infrastructure planning, and governance structures related to regulatory procedures and exit policies.
Land for NIMZs
- Size of land for NIMZ - An NIMZ would have an area of at least 5000 hectares.
- Availability of land - The State Government will be responsible for selection of land suitable for development of the NIMZ including land acquisition if necessary.
Special Purpose Vehicle (SPV)
The administrative structure of NIMZ will comprise of a Special Purpose Vehicle, a developer, State Government and the Central Government.
Setting up of NIMZ
Eight Investment Regions under the Delhi Mumbai Industrial Corridor (DMIC) have been announced as NIMZs. The details are as under:
- Ahmedabad-Dholera investment Region, Gujarat
- Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra
- Manesar-Bawal investment Region Haryana
- Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan
- Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh
- Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh
- Dighi-Port Industrial Area, Maharashtra and
- Jodhpur-Pali-Marwar region in Rajasthan
One NIMZ, outside the DMIC region, at Nagpur in Maharashtra has also been given in principle approval.
The Policy envisages leveraging the existing incentives/schemes of the Government of India and introducing new mechanisms to promote green technologies. These include setting up of a Technology Acquisition and Development Fund (TADF) to support the creation of a patent pool; domestic manufacturing of equipments inter-alia for controlling pollution and reducing energy consumption, environmental audit and green buildings.
Relief from Capital Gains Tax will encourage investment of the income generated from the disposal of unproductive assets like residential properties into manufacturing activity.
8.0 'Make in India' programme of NDA government, 2014
Prime Minister Narendra Modi made his intentions of making India a manufacturing superpower clear, when he launched the Make in India programme in his Independence Day speech on 15th August 2014.
This programme was anchored by the DIPP (Department of Industrial Policy and Promotion) and will be the key fountainhead for all other manufacturing related investments in India.
The Make in India program included major new initiatives designed to facilitate investment, foster innovation, protect intellectual property, and build best-in-class manufacturing infrastructure. Its aim is to raise manufacturing’s share of GDP from 17% to 25%, by 2022.
Most importantly, the Make in India program represents an attitudinal shift in how India relates to investors: not as a permit-issuing authority, but as a true business partner.
- Dedicated teams that will guide and assist first-time investors, from time of arrival.
- Focussed targeting of companies across sectors.
8.1 Ease of manufacturing in India
As per the government, doing business in India just got easier - new de-licensing and deregulation measures are reducing complexity, and significantly increasing speed and transparency. To ease the process of manufacturing, the following are planned :
- Process of applying for Industrial License & Industrial Entrepreneur Memorandum made online on 24×7 basis through eBiz portal
- Validity of Industrial license extended to three years
- States asked to introduce self-certification and third party certification under Boilers Act
- Major components of Defence products' list excluded from industrial licensing
- Dual use items having military as well as civilian applications deregulated
- Services of all Central Govt. Departments & Ministries will be integrated with the eBiz - a single window IT platform for services by 31 Dec. 2014
- Process of obtaining environmental clearances made online
- Following advisories sent to all Departments/ State Governments to simplify and rationalize regulatory environment
- All returns should be filed on-line through a unified form
- A check-list of required compliances should be placed on Ministry's/Department's web portal
- All registers required to be maintained by the business should be replaced with a single electronic register
- No inspection should be undertaken without the approval of the Head of the Department
- For all non-risk, non-hazardous businesses a system of self-certification to be introduced
8.2 Possibilities of growth
India's manufacturing infrastructure and capacity for innovation is poised for phenomenal growth: new smart cities and industrial clusters, being developed in identified industrial corridors having connectivity, new youth-focused programs and institutions dedicated to developing specialized skills.
- Impetus on developing Industrial Corridors and Smart Cities
- A new 'National Industrial Corridor Development Authority' is being created to coordinate, integrate, monitor and supervise development of all Industrial Corridors
- Work on 5 smart cities in progress as a part of the Delhi-Mumbai Industrial Corridor: Dholera, Shendra-Bidkin, Greater Noida , Ujjain and Gurgaon
- Chennai-Bengaluru Industrial Corridor: master Planning for 3 new Industrial Nodes [Ponneri (TN), Krishnapatnam (AP), Tumkur (Karnataka)] in progress
- The East Coast Economic Corridor (ECEC) with Chennai-Vizag Industrial Corridor as the first phase of this project: Feasibility Study commissioned by ADB
- Amritsar-Kolkata Industrial Corridor: DMICDC selected as Nodal Agency for doing Feasibility Study, which is being conducted at fast pace
- North-eastern part of India planned to be linked with other Industrial corridors in cooperation with government in Japan
- New Industrial Clusters for promoting advance practices in manufacturing
- Approval accorded to 21 Industrial projects under Modified Industrial Infrastructure Upgradation Scheme with an emphasis on:
- Use of recycled water through zero liquid discharging systems
- Central Effluent Treatment plants
- Approval accorded to 17 National Investment and Manufacturing zones
- Nurturing Innovation - approval obtained for strengthening Intellectual Property regime in the country through:
- Creation of 1,033 posts
- Further upgradation of IT facilities
- Compliance with global standards
- Application processes made online
- An Act recognizing National Institute of Design (NID), Ahmedabad, as an institute of National Importance notified. This will enable NID to confer degrees, promote research and function as an Apex body in Design Education. Four more NIDs are being developed
- Major impetus given to skill development through Indian Leather Development Programme:
- Training imparted to 51,216 youth in the last 100 days
- It is further planned to train 1,44,000 youth annually
- For augmentation of training infrastructure, funds released for establishment of 4 new branches of Footwear Design & Development Institute at Hyderabad, Patna, Banur (Punjab) and Ankleshwar (Gujarat)
8.3 Defence, construction and railways - the high-value industrial sectors
With the easing of investment caps and controls, India's high- value industrial sectors - defense, construction and railways - are now open to global participation.
- Policy in Defence sector liberalised and FDI cap raised from 26% to 49%
- Portfolio investment in Defence sector permitted up to 24% under the automatic route
- 100% FDI allowed in Defence sector for modern and state of the art technology on case to case basis
- 100% FDI under automatic route permitted in construction, operation and maintenance in specified Rail Infrastructure projects such as:
- Suburban corridor projects through PPP
- High speed train projects
- Dedicated freight lines
- Rolling stock including train sets and locomotives/coaches manufacturing and maintenance facilities
- Railway electrification
- Signaling systems
- Freight terminals
- Passenger terminals
- Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line
- Mass Rapid Transport Systems
- Easing of norms underway for FDI in the Construction Development sector
8.4 Sector-wise approach
For multiple sectors, the government has laid out the macro plans. A list of these sectors is:
Automobiles, Automobile Components, Aviation, Biotechnology, Chemicals, Construction, Defence Manufacturing, Electrical Machinery, Electronic Systems, Food Processing, IT and BPM, Leather, Media and Entertainment, Mining, Oil and Gas, Pharmaceuticals, Ports, Railways, Renewable Energy, Roads and Highways, Space, Textiles and Garments, Thermal Power, Tourism and Hospitality, Wellness
We detail two such sectors below - the Automobile sector and the Defence Manufacturing sector.
8.4.1 Indian automobile sector - Make in India
Basic facts
- Seventh-largest producer in the world with an average annual production of 17.5 Million vehicles
- 4th largest automotive market by volume, by 2015
- 4 large auto manufacturing hubs across the country
- 7% of the country's GDP by volume
- 6 Million-plus vehicles to be sold annually, by 2020
Reasons to invest
- By 2015, India is expected to be the fourth largest automotive market by volume in the world.
- Over the next 20 years, India will be a part of the big global automotive triumvirate.
- Tractor sales in the country are expected to grow at CAGR of 8-9% in the next five years, upping India's market potential for international brands.
- Two-wheeler production has grown from 8.5 Million units annually to 15.9 Million units in the last seven years. Significant opportunities exist in rural markets.
- India's car market has the potential to grow to 6+ Millions units annually by 2020.
- The emergence of large automotive clusters in the country: Delhi-Gurgaon-Faridabad in the north, Mumbai-Pune-Nashik- Aurangabad in the west, Chennai-Bengaluru-Hosur in the south and Jamshedpur-Kolkata in the east.
- Global car majors have been ramping up investments in India to cater to growing domestic demand. These manufacturers plan to leverage India's competitive advantage to set up export-oriented production hubs.
- An R&D hub: strong support from the government in the setting up of NATRiP centres. Private players such as Hyundai, Suzuki, GM are keen to set up an R&D base in India.
- Tata Nano is a sterling example of Indian frugal engineering and is being positioned as a mobilizer of the young generation.
- Electric cars are likely to be a sizeable market segment in the coming decade.
Investment opportunities
- Passenger vehicles: passenger cars, utility vehicles, multi-purpose vehicles
- Two-wheelers: mopeds, scooters, motorcycles
- Three-wheelers: passenger carriers, goods carriers
- Commercial vehicles: light commercial vehicles, medium and heavy commercial vehicles
- Huge demand for low-cost electric vehicles that are suited for safe short-distance urban commutes (averaging 50-100 km/trip) that are rugged enough to perform reliably through India's summers and its monsoon. It is estimated that total electric vehicles sales would amount to 6-7 Million units by 2020
Present foreign investors
- Suzuki (Japan)
- Nissan (Japan)
- Piaggio (Italy)
- Volkswagen (Germany)
- Renault (France)
- Hyundai (South Korea)
- General Motors (USA)
- BMW (Germany)
- Ford (USA)
- Toyota (Japan)
8.4.2 Defence Manufacturing in India - Make in India
Basic facts
- 3rd largest armed forces in the world
- 40% of budget spent on capital acquisitions
- 60% of requirements met by imports
- INR 250 Billion to be invested in 7-8 years
Reasons to invest
- India's current requirements on defence are catered largely by imports. The opening of the strategic defence sector for private sector participation will help foreign original equipment manufacturers to enter into strategic partnerships with Indian companies and leverage the domestic markets and also aim at global business. Besides helping build domestic capabilities, this will bolster exports in the long term.
- Opportunities to avail defence offset obligations to the tune of approximately INR 250 Billion during the next 7-8 years.
- The offset policy (which stipulates the mandatory offset requirement of a minimum 30% for procurement of defence equipment in excess of INR 3 Billion) introduced in the capital purchase agreements with foreign defence players would ensure that an eco-system of suppliers is built domestically.
- The government policy of promoting self-reliance, indigenization, technology upgradation and achieving economies of scale and developing capabilities for exports in the defence sector.
- The country's extensive modernization plans, an increased focus on homeland security and India's growing attractiveness as a defence sourcing hub.
- High government allocation for defence expenditure.
Investment opportunities
- Defence products manufacturing
- Supply chain sourcing opportunity
- Defence offsets
Foreign investors
- Airbus (France)
- BAE India Systems (UK)
- Pilatus (Switzerland)
- Lockheed Martin (USA)
- Boeing India (USA)
- Raytheon (USA)
- MBDA (France)
- IAI (Israel)
- Rafael (Israel)
9.0 ARTIFICIAL INTELLIGENCE IN INDIA
With the announcement of establishing various Centre of Excellence (CoE) for AI by the government, AI is touted to be the bedrock of Government of India’s efforts to develop nine focus sectors like Healthcare, Agriculture, Education, Smart Cities & Infrastructure, Smart Mobility & Transportation, etc. AI is envisioned to propel innovations in India and assist in solving social issues for the country. Between 2014 and 2017, AI startups in India raised less than $ 100 mn from venture capitalists. Future may witness an increase in the flow of investments into advanced technologies like IoT, Blockchain, Data Analytics and, Machine Learning.
9.1 India in the world
India is amongst the top 3 largest startup hubs of the world. A national program on AI shall catalyze these innovative minds to co-create solutions. To actualize the ambitious initiative, the Government identified nine priority areas. "Invest India" shall become the executing partner and provide R&D support to implement this vision in creating Artificial Intelligence focused Centre of Excellence all over.
9.2 Government Initiatives in AI
A "Task Force on Artificial Intelligence (AI) for India’s Economic Transformation" was constituted on 24th August 2017. The Taskforce recommended an Inter-Ministerial National Artificial Intelligence Mission to act as a nodal agency for coordinating AI-related activities in India. To create a policy framework and to develop the ecosystem for Artificial Intelligence, Ministry of Electronics & Information Technology (MeitY) constituted four committees covering all the aspects of AI. These Committees are:
uCommittee on platforms and data for AI
uCommittee on Leveraging AI for identifying National Missions in Key Sectors
uCommittee on Mapping Technological capabilities, Key policy enablers, Skilling, Re-skilling, R&D
uCommittee on Cybersecurity, Safety, Legal and Ethical issues
Various Ministries and agencies are working on the use of Artificial Intelligence. Centre for Development of Advanced Computing (CDAC) has been working in the area of AI with a focus on image processing, audio assistance, education, health, agriculture, transportation, etc. Department of Agriculture Cooperation and Farmer’s Welfare is working with the private sector in areas like crop monitoring, Block-chain technology to connect producers and consumers, identification of pests/diseases and weather-based crop management system. Department of Revenue is using data analytics and forecasting technologies in the administration of Direct & Indirect Taxes.
9.3Potential Impact in India
AI is emerging as a new factor of production, augmenting the traditional factors of production viz. labour, capital and innovation and technological changes captured in total factor productivity. The various estimate suggests AI boost India’s annual growth rate by 1.3 percentage points by 2035. This roughly translates to roughly $ 1 tn to the Indian economy. Impact will be across these sectors -
(1)Agriculture: AI holds the promise of driving a food revolution and meeting the increased demand for food (global need to produce 50% more food and cater to an additional 2 billion people by 2050 as compared to today). AI can help achieve this vision by contributing to critical areas like:
Crop Selection – AI-based solutions are ideal for crop selection as they can take complex parameters like soil type, monsoon dates, availability and affordability of ides, etc. into account along with historical data while choosing the crops.
Crop Monitoring – Using technologies like IoT, drones, satellite imaging, etc. authentic data can be collected from the fields, monitored and analyzed by AI-based applications to identify the right solutions.
(2)Healthcare: Application of AI in healthcare can help address issues of high barriers to access to healthcare facilities, particularly in rural areas that suffer from poor connectivity and a limited supply of healthcare professionals. AI has the potential to transform the delivery of health services in rural areas, a challenge India has grappled with since Independence. It can help in:
uCreating electronic health data repositories with sufficient high-quality annotated health data for machine learning applications
uCreating a national-scale clinical decision support system to enable better management of routine clinical problems by less-skilled providers
uCreating self-learning systems in digital fields like radiology, pathology, and genomics, to augment the future of healthcare
(3)Education & Skilling: Indian education has challenges like lack of teaching resources and individual attention, unequal access to educational opportunities, outdated pedagogies, etc. AI-based teaching addresses a lot of issues faced in classrooms like:
uAI-based analytics to accurately measure outcome and thus help the Government direct its resources in an efficient manner
uCreate dynamic courseware to enable reskilling in specific sectors
(4)Environment: Air pollution, water pollution, sanitation, etc. are all contributors to environmental degradation and are the primary causes of widespread diseases impacting the livelihood in India. AI will add immense value in the following areas:
uIntelligent automation to estimate and control at source, the pollution level of smoke, effluents and solid waste released into the air, soil and water
uIntelligent automation to estimate and predict depletion of non-renewable natural resources, green cover and endangered species
uPrediction of meteorological events such as cyclones, floods and natural disasters due to climatic or other anthropogenic changes
(5)National Security: National security imperatives require that technology-based force multipliers be developed. Some areas where AI-based systems could be usefully deployed are:
uAutonomous surveillance and combat systems
uAdaptive communications systems
uAI-based cyber-attack mitigation and counter-attack systems
uPublic Investment in AI
uThe Government of India is pushing investments through the following areas to establish an AI ecosystem.
(6)Digital India: Double allocation of INR 3,073 crore to further research in Robotics, Artificial Intelligence (AI) and the Internet of Things (IoT), among others.
National Program on AI: Set up by NITI Aayog at IIT Chennai. The research will focus to encourage Big Data, cybersecurity and Robotics are some of the initiatives that will help promote Industry 4.0.
AI penetration in Private Space: Over half (58%) of the companies using AI in the country work at scale, beyond pilot and test projects.
10.0DST programmes boosting Make in India initiative
The Department of Science and Technology has made significant contributions to most of 25 focal sectors of the ‘Make in India’ initiative through various programmes. This has lead to innovative home grown, affordable technologies to help companies manufacture their products in India.
10.1Details
(1)Equipping Indian Railways with Ultra-modern Technologies - Technology Mission for Indian Railways (TMIR) – an initiative of the Department of Science and Technology (DST), Ministry of Railways (MoR), Ministry of Human Resource Development and Ministry of Industry – will take up research projects to develop state-of-the-art technologies for use in Indian Railways on an investment sharing model.
(2)Advanced Manufacturing Technology (AMT) Programme - DST has supported several projects under a programme to promote development of advance manufacturing technologies in the country. These have been in the areas like design tools and process innovations, modeling & simulation platforms, digital manufacturing, flexible scale manufacturing, additive manufacturing, smart manufacturing, advanced robotics (AR) & industrial internet of things (IIOT), wearable low-power electronics including energy harvesting, sensor networks, etc.
(3)Technical Research Centres - Technical Research Centres (TRCs) have been established in five autonomous institutions of DST namely, SCTIMST, Trivandrum; ARCI, Hyderabad; JNCASR, Bengaluru; IACS, Kolkata and SNBNCBS, Kolkata for technology & product development. The Sree Chitra Tirunal Institute for Medical Sciences and Technology (SCTIMST), Trivandrum developed neuro-prosthetic devices, cardiovascular devices, tissue devices and biological and combinational products. The International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI), Hyderabad have shown results in technologies for solar energy, energy storage, energy efficiency, energy conversion, electric/hybrid vehicle systems, etc. One Indian patent was granted in 2014 and 25 Indian patent applications are filed till date; one more is in the process of getting filed. One international patent has been granted during 2014-2018. The Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR), Bengaluru is working on 7 technologies filed 15 Indian and PCT applications incubated one start-up ‘Avinir’ which deals with with DNA probes having potential for various applications, including diagnostics. Another start-up, which would deal with development of anti-bacterials for use in paints and surgical instruments, is under incubation. The Indian Association for the Cultivation of Science (IACS), Kolkata and S.N. Bose National Centre for Basic Sciences, Kolkata have taken steps to establish the necessary laboratory facilities for accelerating applied research.
(4)Partnering with MHRD for Uchchatar Avishkar Yojana (UAY) - SERB is partnering with MHRD for UAY projects and funds selected projects. It is enhancing industry-academia interaction, encouraging industry relevant R&D, using the best human resource and infrastructure in academic institutions. The share of SERB funding will be 25%, while MHRD will contribute 50% and industry the remaining 25%.
(5)Collaboration with MHRD in Impacting Research Innovation and Technology (IMPRINT) Project - DST has joined hands with MHRD to implement IMPRINT projects, which addresses major societal and developmental needs such as healthcare, information and communication technology, energy, sustainable habitat, nanotechnology, water resources and river systems, advanced materials, security and defence, and environment and climate.
(6)Twelve projects in different domain areas particularly in nanotechnology and Advanced Materials have been funded by SERB.
(7)The second phase of IMPRINT-2 with a total budget of Rs.970.5 crore was launched in March 2018. DST and MHRD is jointly steering this national initiative. SERB is the nodal agency for implementing IMPRINT-2. The initiative expands the catchment of implementing institutions by adopting a more demand- driven strategy of solution development and by incorporates specific externalities of the states of India so as to make end- user translation and technology adoption easier. To simplify and streamline the process, attract wider participation of stakeholders including industry and sharpen the focus, a new and revised version of IMPRINT, IMPRINT Round 2, was envisaged steered jointly by MHRD and DST through SERB. Core mandate of IMPRINT 2 include development of products/processes and viable technologies for addressing the identified challenges in different domains, formulating and developing focused translational projects against identified technology thrust areas, evolving new technology transfer models for enabling technology diffusion to industry and stakeholders, aligning the projects with the needs of various industry sectors and the States of India, in order to achieve end-user translation, facilitating building capability and competence in identified technology thrust areas in the various HEIs and universities, in order to plug the demand-supply gap of human resources in specific areas of need.
11.0THE 3D PRINTING TECHNOLOGY
According to expert, 3D printing is potentially as game-changing as the steam engine or telegraph were in their day and could herald a new industrial revolution.
3D printing or additive manufacturing is a process by which three dimensional solid objects can be created from a digital file. The creation of a 3D printed object is achieved using additive processes. In an additive process an object is created by laying down successive layers of material until the entire object is created. Each of these layers can be seen as a thinly sliced horizontal cross-section of the eventual object. To prepare the digital file created in a 3D modeling program for printing, the software slices the final model into hundreds or thousands of horizontal layers. When this prepared file is uploaded in the 3D printer, the printer creates the object layer by layer. The 3D printer reads every slice (or 2D image) and proceeds to create the object blending each layer together with no sign of the layering visible, resulting in one three dimensional object. The most common technologies used to achieve this are Stereolithography (SLA), Selective Laser Sintering (SLS) and Fused Deposition Modelling (FDM).
In addition to the potential ecological impact of producing products right where they are needed 3-D printing could make small-scale production of objects cheaper, rather than turning out huge numbers which may go to waste.
Applications of 3D Printing technology range from design visualization, prototyping/CAD, metal casting to architecture, education, geospatial, healthcare and entertainment/retail. Other applications include reconstructing fossils in paleontology, replicating ancient and priceless artifacts in archaeology, reconstructing bones and body parts in forensic pathology and reconstructing heavily damaged evidence acquired from crime scene investigations. With the technology becoming cheaper and more and more number of people beginning to afford it, this technology is now being used for rapid prototyping and rapid manufacturing.
3D printers capable of producing an output in colour and multiple materials already exist. Continuous improvements in technology will make 3D printing of functional products possible. This will have wide ramifications on energy use, waste reduction, customization, product availability, medicine, art, construction and sciences. Hence it is said that 3D printing has the ability to change the manufacturing world.
12.0THE TECHNOLOGY SECTOR IN INDIA
According to a report released by the Boston Consulting Group and the Confederation of Indian Industry, the Indian technology industry is expected to grow to Rs.1.8 trillion by 2016 due to increasing technology requirements of Indian businesses and the government and increased consumerisation. The contribution of the Internet economy to the country's gross domestic product (GDP) is expected to increase from 4.1% in 2010 to 5.6% in 2016, to touch Rs.11 trillion, driven largely by the country's demographic dividend. Also, the number of billion-dollar Indian companies will increase from 141 in fiscal year 2010 to more than 700 by 2020, and these firms will require extensive use of technology to remain competitive. Currently, India's technology spends as a percentage of GDP is less than 1% against the global average of 2.5%. The report also projects that the increased use of technology will also boost labour productivity and make businesses more efficient. India's per-capita labour productivity was $9,310 in 2011, compared with $69,900 in the UK and $96,000 in the US.
More and more MNC are setting up their R&D centres in India which is a clear indication of that high-skilled Indian talent still remains in demand. These MNC captive centres in India, combined with Indian providers of engineering R&D outsourcing, account for about 23% of the overall global engineering R&D outsourcing market. This makes India by far the largest provider of such outsourcing services. Among Indian providers, HCL, Wipro and TCS are clear leaders. HCL, which is the only one that reports the revenues of this segment separately, had over $700 million of its $6 billion revenue in 2012-13 coming from this segment. Wipro's and TCS's revenues from this segment are said to be in a similar range. Infosys and Tech Mahindra come in next, followed by L&T Technology Services, iGate, Infotech Enterprises, Mindtree and Symphony Teleca.
Total exports from India in engineering goods & R&D services stood at USD 70.5 billion in 2014-15.
Engineering analytics is seen to be emerging as a significant opportunity area.
