3/10/2014

1

1

Conference on

Innovation Ecosystem- Indian Perspective

27-28 February 2014

Innovation Ecosystem: How fertile it is?

Organized by

National Research Development Corporation

in association with

University of Petroleum & Energy Studies, Dehradun &

Uttarakhand State Council for Science and Technology

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

3/10/2014

2

3

INNOVATION ECOSYSTEM Innovation eco-system must facilitate the birth of new ideas and also provide platforms for the successful implementation of these ideas.

In the case of a successful

innovation system - institutions

matter – yet cooperation

matters even more

It is now being acknowledged that

innovation is a result of

interaction between different

actors: research institutions only

being one group of actors.

Identification of key actors, the

promotion of their interaction,

inter-linkages and co-operation

and favorable framework

conditions are essential for

successful innovations.

4

Interaction of various Stake-holders in Innovation System

3/10/2014

3

5

Concept to Market

:Risks in Scaling up S&T Innovations

Public Resources

For risk coverage

Contents

1. Understanding Innovation Ecosystem

2.Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

3/10/2014

4

7

• According to the Global Innovation Index 2013, India

ranks 66th amongst 142 countries surveyed.

• It is inconsistent with India‘s economic strengths and its

current government policy, which claims to focus a

great deal on Science, Technology and Innovation

(STI).

• This ranking is below any of India‘s BRICS peers,

which either suggests that the models of innovation

currently utilized in India are not translating into

measurable gains in development, or that these gains

are not significant.

Indian Innovation System - Weak

8

The Global Picture:

How Other Countries Compare to India

Source: OUR FRUGAL FUTURE: Lessons from India‘s innovation system, July 2012

3/10/2014

5

9

Efficiency of Invention and Knowledge

Source: OUR FRUGAL FUTURE: Lessons from India‘s innovation system, July 2012

10

• India is not seen as an innovation hub, globally, despite

India‘s pervasive jugaad culture;

• Development gains produced by these innovations are not

as significant, on average, compared to those of other

countries;

• Political stability, workforce skill, infrastructure and ease of

business creation needs focused attention and dramatic

reform if India is to reach the levels of the more innovation-

friendly countries;

• India is an economy in transition and with ever more focus

on inclusive innovation, all constituents of its ecosystem

will have to develop the ability to influence reform;

• Creating and sustaining an innovation ecosystem depends

on building and strengthening interdependent links

amongst ecosystem players;

Indian Innovation System - Weak

3/10/2014

6

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3.Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

12

Eco-system for Funding Innovations

3/10/2014

7

13

Funding Options

Upside Downside

Angel Investors – they are High Net Worth (HNW) individuals

• More than money, they provide

networking opportunities

• Relatively patient about their investments

• Angels are not bound by all the rules that

VC firms are.

• Not easy to find Angel Investor

• Because they operate as angel networks, hard

to manage the divergent interests of group of

angels

• Angels only consider companies that have an

exit strategy—meaning companies that could

get bought or go public.

• Despite 100+ Angel networks in India (eg. Indian Angel Network & Mumbai Angels), each

year sees only tens of deals.

• Although, these angels have their own HNI/VHNI to tap into, yet few startups get funded.

• In US, angel funding is more than all VC funding, may be because of tax benefits, mature

ecosystems, risk-seeking, etc.

14

Funding Options

Upside Downside

Venture Capitalists - VC firms are organized as funds, much like hedge funds or mutual funds.

• Professionally managed VCs bring not

just money but also experience and

advisory role

• Suitable for fast growth companies going

to launch IPO

• Typically have larger funds to invest but

take lesser risks

• Founder must be interested in selling the

business or going public within three to five years

• Founder must be prepared to share control

• VCs hand over a term-sheet; A term sheet is a

summary of what the deal terms will be when

and if they do a deal;

• Founders are usually required to accept "vesting―

i.e. to surrender their stock and earn it back over

the next 4-5 years.

• VCs don't want to invest millions in a company

the founders could just walk away from.

• One of the most difficult problems for startup founders is deciding when to approach VCs.

• You get only one chance, because VCs rely heavily on first impressions.

(a) they ask who else you've talked to and when and

(b) they talk among themselves.

(c) If you're talking to one VC and he finds out that you were rejected by another several months ago,

he also might turn away.

• There are about 200 VC firms and 160 Foreign Venture Capital Investors operating in India

with an estimated investment of US$10 b. However, in a boom year, there are only a few

hundred deals.

3/10/2014

8

15

Funding Options

Upside Downside

Seed Funding Firms - Seed firms differ from Angels and VCs in that they invest exclusively in

the earliest phases—often when the company is still just an idea.

Seed Firms are often called Incubators

Strategic Investors

• Enhances your credibility in the industry

• Money can come with access to benefits

like manufacturing, distribution, and

marketing

• Strategic Investor can force you to recalibrate

your entire business to serve them

• Dependency can be risky

• Strategic Investor can prohibit you from

selling to their competitors

Bankers - 'A banker is a fellow who lends you an umbrella when the sun is shining, and takes it

away from you when it rains'

Crowd Funding - ―the process of aggregating small amounts of money from a large number of

people in order to accomplish an objective‖

• Collaterals and credit score check is not

required

• Websites are easily setup by agencies for

raising funds for a cause, to which

audience is directed

• Agencies behind the website take a certain

percentage of money as their service fees

• Fund raising is time consuming

16

Funding Options

Upside Downside

Government Funding / Grants - can be used to augment entrepreneurs own funds to run a

successful business venture

• Free money • Highly competitive

• How you use the funds is strictly defined

• Applying for funding often arduous

• Restrictions on use of grant found

burdensome by beneficiaries

3/10/2014

9

17

Government Funding

The government offers funding primarily for technology startups, from early-stage

development to full-scale commercialization

Government funding can be categorized into:

• Technology Development Funds:

SBIRI, SINE (IIT-B), CIIE (IIM-A), SIDBI Innovation & Incubation Centre (IIT-K), NSTEDB -

TBIs

• Funds for patent protection

NRDC, M/o MSME thru NMCC, DeITy (Int’l Patent Protection in Electronics)

• Funds for Technology In-licensing:

Incubator related seed funds

• Technology scale-up/validation/de-risking funds:

NMITLI, PRISM, PACE

• Market entry funds:

Network of Angel Investors, NIF-Micro-venture Innovation Fund, TIFAC-SIDBI (SRIJAN)

• Expansion funds:

IVCA, SIDBI

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

3/10/2014

10

19

S&T Departments/ Councils

Building and Nurturing India‘s S&T Ecosystem...

CSIR

1942

1947

ICAR

ICMR

1949

1954

DAE

DRDO

1958

1971

DOE DST

DOS

1972

1980

DOEn

DOD

1981

1983

MNES

DBT

1985

1985

DSIR

20

RFD: Innovation Action Plan

Implementation of a significant change in the way the Department operates or in

the products and services it provides.

3/10/2014

11

21

To further encourage R&D across all sectors of the economy,

weighted deduction on expenditure incurred on approved in-

house R&D units under section 35(2AB) of Income tax Act,

enhanced from 150 per cent to 200 per cent.

Weighted deduction on payments made to National

Laboratories, Universities or IITs for approved programme on

scientific research undertaken under an u/s 35(2AA) of Income

tax Act, enhanced from 125 per cent to 175 per cent.

An innovative product called 'soleckshaw' has been developed

to replace manually-operated rickshaws. It runs on batteries

which are charged by solar power.

- Union Budget 2010 proposes to provide a concessional

excise duty of 4 per cent to this product.

- Its key parts and components are also being exempted

from customs duty.

DSIR Policy Interventions: 2009-2010

22

Scientific Entrepreneurship Scheme: Researchers permitted to have equity stake in scientific enterprises/ spin offs while in

professional employment

Knowledge to Equity Scheme: Scientific Establishments

permitted to invest knowledgebase as equity in the enterprises

Setting up of Technology Incubation Centres: Scientific

Establishments allowed to set up incubation centres

Mobility of Researchers: Researchers mobility permitted among

Industry, Research Institutions, Academic Institutes, Universities and Industries and other Scientific establishments

Boosting Creation of Knowledge Enterprises

A national effort pioneered and led by CSIR/DSIR:

Cabinet Note Approved on 25th May, 2009, OM Issued

3/10/2014

12

23

Tridiagonal Solutions Pvt Ltd

Software products for process

industries

Dr Ranade

Scientist

Entrepreneur

Tridiagonal Solutions Pvt. Ltd.:

• Develops products and

solutions by harnessing power

of computational modeling to

enhance effectiveness and

efficiency of industrial

processes

• Sites in Pune and San Antonio

Science Policy for Scientific Entrepreneurship

Vyome Biosciences Pvt. Ltd.:

• Biopharmaceutical company focused

at best in class drugs for

dermatology care

• To exploit modern Functional

Genomics, Biotechnology, Medicinal

& Polymer Chemistry and

Nanotechnology

Vyome Biosciences

Leadership in Dermatology

Dr. Gokhale

Scientist

Entrepreneur

CSIR Researchers spin-off companies

24

CSIR Innovation Complexes Driving World Class Translational Research…

Challenge Driven

Innovation Strategy

Industry Cluster

Specificity &

Connectivity Leveraging Regional

Innovation Ecosystem

Catalysing

National &

International

Market

Opportunities

• Affordable Healthcare

• Drugs and Therapeutics from Novel

Sources

• Clean Energy

• Green Infrastructure and Innovative

Engineering

• Zero Emission Technologies

• Fourth Paradigm

• Agri-Biotechnology

• Specialty Chemicals, Grass Root

Innovations and CSIR 800

• Nutragenomics

• Bio-Inspired Chemistry and Chemical

Technologies

• Innovative Products and Processes/

Biomedical applications

• Co-creation as a resource for

developing technological

solutions for critical needs of

industry and society

• Crowd sourcing as a model for

trans (industry) cluster

collaborations for developing

products, technology, new

application and service models

Str

ate

gy

Key A

reas

3/10/2014

13

25

CSIR Innovation Complexes

The Outcomes

• Inclusive Innovation

• Newer markets based on tapping

yet – undiscovered innovation

opportunities

• Innovative products, technologies,

new applications, service models

embodying cross-sector solutions

• Demand driven sustainable

innovation initiatives which balance

supply based research effort

…Motivating Indian Industry to embrace Innovation & Collaboration…

…Creating Entrepreneurship in New Formats…

26

DBT: Build an Innovation Ecosystem for 21st century

26

• SBIRI, BIPP, BIRAC

• Stanford India Biodesign To develop the Indian medical device innovation ecosystem

ENT surgeon and 2012 fellow Jagdish Chaturvedi has already invented 12

devices, of which five are already successfully licenced.

Limits clinical work to two days a week, spending four days working on his

inventions as director, clinical innovation and partnerships at start-up

accelerator InnAccel, Bangalore.

• DBT Centre at IITM Research Park

• Wellcome Trust DBT Initiative on Affordable

Healthcare

• Grand Challenges Programme

Opportunities for Electronic Design and Manufacturing (ESDM) The Cabinet has approved setting up of two semiconductor units entailing

investments of Rs. 51,550 crore and will now prepare a detailed project report and

has announced to issue a letter of intent to the participants.

3/10/2014

14

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

28

3/10/2014

15

29

Utilization of CSIR‘s Inventions

Total Patents in force (India)

Total patents in force (abroad)

2350

3250

Total Patent granted (India)*

Total patents granted

(abroad)*

1507

1282

* Figures for 11th FYP only

Utilization of CSIR‘s

Patents in Force : 9 %

Worldwide Rate of

Patent Utilization : 3-5 %

US Patents Granted (till September 2011)

Organisation No. of

Patents

Granted

% Contribution

CSIR 1231 90.32

IITs + IISc 43 3.15

Others 89 6.53

Source: USPTO

High Quality

Research

Leadership in

Innovation

Transdisciplinary

S&T Education

(AcSIR)

CSIR

Today

30

Streptokinase – CSIR‘s Success Stories

in Licensing - I

• Cause of death – development of a blood clot causing vascular blockage in Heart

• Prevention by timely intravenous administration of a thrombolytic agent

• IMTECH developed first indigenous clot buster drug

‗Streptokinase‘ and it was launched in market in 2000

through Cadila Pharma

• IMPACT – crash down of the price from Rs. 3,500 to

Rs. 2,000 per dose

3/10/2014

16

31

Sea Weed Technology-CSIR‘s Success

Stories in Licensing - II

• Integrated method for production of carrageenan and

liquid fertilizer from fresh seaweeds - United States

Patent 6,893,479 (CSMCRI)

• An integrated method is developed to utilize to a

maximum extent the fresh biomass of seaweeds

such as Kappaphycus alvarezii that can be crushed

to release sap and where the sap is useful as a

potent liquid fertilizer

• Liquid Sea Weed Fertilizer increases yields from

same seed by 10% for wheat, 30% for peddy, 20-

30% for fruits and vegetables to 35% for corn and

chana, BT cotton 20%, Banana for 19%.

• CSIR licenses Sea Weed Technology to Pepsico

32

• Process for the preparation of ultrafiltration

membranes of polyacrylonitrile, using malic acid as an

additive showing high purification and water

permeating ability - United States Patent 6,858,141

(NCL)

• Cost of water purification (Bacteria + Virus free) few

paise per litre as compared to Rs. 10 per litre of

mineral water

• Licensed to the industry (Membrane Filters (I) Ltd);

Social Impact- Very high

Ultra-filtration Membrane-CSIR‘s Success

Stories in Licensing - III

3/10/2014

17

33

India‘s patent ecosystem — encouraging

strong patents or discouraging innovation?

When India issued a compulsory licence for the

anticancer drug Nexavar (sorafenib) in 2012 —

meaning that cheaper copies could be made without

the permission of the patent owner — the eyes of the

world were drawn to the Indian patent system.

This move has been followed by the rejection or

revocation of several patents that protect anticancer

and other drugs which have patent protection in

many other countries

Does this indicate that the patent system in India is

weak, or rather that it is well placed to weed out

weak patents at an early stage?

34

3/10/2014

18

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

36

Innovative interventions required in MSMEs

MSME‘s Low Access

to Credit

Lack of Skilled

Manpower

Inadequate

Infrastructure

Low Access

to national

and global

markets

Low Levels of

Innovation

and little R&D

High Cost of

Raw

Materials

3/10/2014

19

37

Pilot CICs Focused at MSME

Cluster

CSIR Laboratory

Units Workers Turnover S&T Interventions

Brass Cluster,

Moradabad

CSIR-NML

CSIR-CECRI

29000 3.5 Lakh

Rs. 2500

Crore

Making brass shine more,

low cost Jhama coal to

replace expensive imported

coal

Mango

Cluster,

Krishnagiri

CSIR-NIIST

CSIR-CFTRI

73 2.5 Lakh

Rs. 700

Crore

Enhancing the shelf life of

Mangoes and creating new

products

Bamboo

Cluster,

Agartala

CSIR-CIMAP

16200 > 2 Lakh

Rs. 74

Crore

Developing alternate for Jiget

binding glue for Agarbatti

and Hand rolling to Machine

rolling of Agarbatti

S&T Intervention for Technology Depth for MSMEs CSIR-NInC Initiative : 6 Clusters on Pilot Mode

Additional 60 MSME Clusters identified for S&T intervention covering:

Leather, Pharma, Clay, Rubber, Dyes & intermediates, etc.

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road ahead

3/10/2014

20

39

Amazing Innovations • Shantha Biotech which through good indigenous research and

innovation has been able to develop a vaccine which drastically reduces the price of hepatitis B vaccine from imported version of Rs. 1500/dose to Rs. 15/-.

• EKO India –Finacial Services for the Common man • Sparsha Pharma –Transdermal patch for cancer patients • Jaipur Foot • Low cost cancer detection kits

• IIT-Madras IIT-M has developed a method that will let electricity

boards provide a small amount of uninterrupted DC power to every house in the country, enough to run three lights, two fans and a mobile charger.

40

―A near fanatical focus on cost reduction‖ 40

AT

LOW

COST

3/10/2014

21

TATA Swach Water Filter

Providing clean

drinking water at low cost?

41

• Originally created for Gujarat Earthquake relief

• ―Not good enough‖

• Filtration process refined by Tata Chemicals R&D team-

nanosilver

• Appliance design by Titan

• Today, sold by Tata Chemicals

Environmentally-friendly + high tech + economical

42

New Rupee symbol was crowd-

sourced….

42

Uday Kumar

Designer of the New

Rupee Symbol

3/10/2014

22

43

Other successful business model innovations

• Until a little over 10 years ago, Bajaj Auto was an insignificant player

in the motorcycle industry. Today, it is the second-largest motorcycle

company in the country and a strong leader in more powerful and stylish

sports bikes. The root of Bajaj‘s success was the development of the

Pulsar, a bike that combined power, style and fuel economy based on its

proprietary DTSi engine technology. The timing of the launch was

perfect, as it coincided with the take-off of the software and business-

process outsourcing industries that employ thousands of young,

qualified, and aspirational males, who have the disposable income and

the desire to own such a bike.

• Biocon entered the biopharmaceutical business only in 1998. Yet, today

it is regarded as India‘s leading biotech company. It is well ahead of

other Indian companies in the production of biosimilars (the biotech

equivalent of generic drugs) and hopes to launch India‘s first locally

developed novel, biotech-based drug in the next few years. Biocon has

used product and process innovation to exploit a core capability in

fermentation technology, built during its earlier incarnation as an

enzyme company.

44

• Titan Industries, India‘s largest watchmaker, has long been known for its

stylish watches and tastefully designed retail stores. Yet, till well into this

millennium, it struggled to grow its sales revenue. But those struggles became

history once Titan transformed itself. The company‘s turnover has shot up to

the U.S. one billion dollar mark, riding on the back of accelerated growth in its

jewelry business. Innovations like having a karat meter in every store to

establish the purity of the gold in its jewelry attracted customers, who also

liked the designs the company created to address the mass market.

• Pantaloon (the flagship company of Indian retail King Kishore Biyani‘s

Future Group) is today one of the country‘s foremost multi-format retailers

with a national footprint. The company has constantly experimented with new

formats, based on a culturally embedded, intuitive understanding of the Indian

consumer.

The emergence of innovation as a differentiator in the Indian

market is a recent phenomenon which has enabled

companies to tap a mass-market sweet spot.

3/10/2014

23

Contents

1. Understanding Innovation Ecosystem

2. Weaknesses in Indian Innovation Ecosystem

3. Ecosystem for Funding Innovations

4. Innovation in Government Departments

5. India‘s Patent Ecosystem

6. Innovative interventions required in MSMEs

7. Innovation Successes

8. Indian Innovation Ecosystem – the road

ahead

46

Will India be the next Silicon Valley or Boson Route

128 or Cambridge, UK?

Will we see a Google or an Apple emerge in India soon?

That‘s probably unlikely in the next few years because

these regions have a complete and reinforcing innovation

ecosystem that has enabled it to ride one technology wave

after another.

• Existence of infrastructure in the form of venture capital,

• Availability of specialized legal services and personnel

with technical expertise

• Presence of the R&D organizations producing technology

• Availability of local entrepreneurial climate for spin-offs

(sometimes called ―entrepreneurial fever‖) .

3/10/2014

24

47

―The trick for government is to strike the balance between trying to let

as many flowers bloom as possible and recognizing those which are

really not going to bloom and to stop feeding that pot plant.‖ - David Gill,

Managing Director of St John‘s Innovation Centre

Despite weaknesses in India Innovation Ecosystem, all is

not lost and by no means is India in an irreversible position

The main objective of promoting innovation in India at the

moment is not to really worry about development of cutting edge

technology per se but to nurture and support intelligent use of

technology to meet important consumer and national needs.

India‘s innovation ecosystem should reward those displaying creative

confidence, facilitate partnerships, help ideas and technologies reach

the market, and encourage young professionals to set up their own

business ventures i.e. support incremental or frugal innovations.

48

3/10/2014

25

To contribute towards India being a Centre

of Frugal Engineering

• Frugality is not just about low cost but also about

more value;

• Need to be sensitive to low resource environment and

integrate these into innovations

• Industries need to practice ―reverse innovation‖ –

process of developing products in India for the global

market • to institute ‗frugal, distributed and affordable‘

innovation - develop products and services that are

affordable by people at low levels of income without

compromising the safety, efficiency and utility

Need to focus on promoting an inclusive and sustainable model of innovation

3/10/2014

26

Thank you!