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July 5, 2007
Dear Mr.
Prime Minister,
The National Knowledge Commission identified the role of
innovation as one of the key factors in India’s economic growth. Innovation is
a process to achieve measurable value enhancement in any commercial activity,
through introduction of new or improved goods, services, operational and
organizational processes. It is a significant factor in facilitating
competitiveness, improvement in market share and quality as well as reduction
in costs.
NKC conducted a nationwide survey among large firms, as well
as small and medium enterprises to explore the role being played by innovation
in fuelling India’s economic growth. The NKC Survey reveals that Innovation
Intensity (i.e. the percentage of revenue derived from products/ services
which are less than 3 years old) has increased for large firms as well as
small and medium enterprises. The strategic prioritization of innovation as a
factor critical to growth and competitiveness has also achieved significant
prominence since the start of economic liberalization in India. The NKC Survey
further highlights crucial parameters at the firm level that have enabled some
firms to be more innovative than others, including the role of structural
frameworks and processes. It is expected that dissemination of the survey
results across India’s industrial spectrum will highlight best practices in
industry and thereby also generate catalytic impact on a wider scale.
However, it is pertinent to point out that the most critical
external barrier for both large firms and small and medium enterprises is
skill shortage arising out of lack of emphasis on industrial innovation,
problem-solving, design, experimentation, etc in the education curricula.
There is also need for more effective collaboration between industry,
universities and R&D institutions. Systematic reform of the higher education
system (including skill based marketable vocational education) in India is
essential to develop the required intellectual capital as well as generate
effective synergies among industry, government, the educational system, the
R&D environment and the consumer. Innovation is a complex activity that
requires widespread interaction across the entire economy, from the grassroots
to the large firm level. We recommend a comprehensive campaign to address
these issues and to spur efforts to make India a global leader in innovation.
Thank you and warm personal regards,
Sam Pitroda,
Chairman,
The National Knowledge Commission
Copy to: Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning
Commission
Mr. Kamal Nath, Minister for Commerce and Industry
Mr. Kapil Sibal, Minister for Science and Technology
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