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Economic Survey 2021: Indian innovations improve sharply, but have to play catch-up with China

India needs to boost its investments in primary and secondary education to help push the country's rank with regards to innovation. The survey further points out the need for private enterprises to step up R&D investments.

January 29, 2021 / 08:47 PM IST
Source: Reuters

Source: Reuters

China has leapfrogged India in terms of innovation and the speed of implementation of latest technology, says the Economic Survey 2020-21, released by the finance ministry on January 29.

While India improved on the overall innovation index, climbing many spots to 48 in 2020 from 81 in 2015, China at time has climbed to 14 from 29, it noted.

The survey has cited the 15-year target the Chinese government had taken in 2006 to improve the country’s performance on the innovation front, and stated how they have almost achieved their goals on most fronts.

Citing multiple data points, the report said that India has improved on innovation inputs. Inputs here mean policy decisions and overall innovation environment while output stands for the actual amount of work that gets done.

On both fronts, India has improved its rank significantly, but China, which was already advanced than India, has managed to race ahead further. In fact, as on 2020, in terms of innovation output, China is ranked six, compared to India’s 45.


The only metric where China has slipped and India has gained is knowledge and technology. India has jumped to 27 in 2020 from 50 in 2014, whereas China has declined slightly to seven in 2020 from the second position in 2014.

Overall research and innovation need massive investments in education, especially in the primary and secondary levels. The survey pointed out that the country has not seen major success in those levels.

The country has tasted success in the tertiary knowledge segment, which helped it in the human resources front to improve rankings to 60 in 2020 from 103 in 2015. On this front, China has also improved its rankings, albeit at a slower pace. It currently stands at 21 compared to 36 in 2013.

India has always benchmarked its own development with its northern neighbour. In last year’s economic survey, it had highlighted the speed of job creation in China, which is something that India can replicate. However, China has prioritised investments across sectors -- from technology to smartphones to defence.

While there have been certain pockets of strong investments in technology in India, most of it is driven by government expenses. Overall, the participation of private sector is very low.

The report has cited that the government is investing close to 56 percent of the gross domestic product on research and development -- much higher than many developed economies. The government wants the private sector to step up investments in this space and get out of the ‘jugaad’ mindset, something which Indians are famous for.

Private enterprise has also complained in the past about bureaucratic delays in permitting innovations to enter the production stages. For instance, in 2017, Rajiv Bajaj had commented that the stifling of the innovation environment in India will make ‘Made in India’ into ‘Mad in India’.

He was speaking in the context of securing approvals for his four-wheel quadricycle, Bajaj Qute.

The Economic Survey cites the need for more resident Indians to file for patents. Only 36 percent of the total patents filed by Indians are residents of the country. The average share of resident nationals filing for patents in other developed economies is 62 percent. So, for India to achieve this number, over the next 10 years, it needs to grow this base at a CAGR of 9.8 percent.

While this is a steep target, China has grown its share at a CAGR of 16 percent in 2010-2019.

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Pratik Bhakta
first published: Jan 29, 2021 08:47 pm
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