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My gated community recently had a display stall for snabbit, a new app where u can hire domestic help in … yes, you guessed it, 10 minutes. Another addition to the great Indian gig economy. I am not going to make any judgements on the blooming of such apps and services nor on the treatment of their “contractors”. My gripe is directed at the lack of basic innovation in the entire Indian economy. Everything from cheap plastic toys to expensive drones still come with a “Made in China” label and we are nowhere in the global discussions on space, AI, EVs or any new age technology of consequence. This is despite having a major economic liberalization going on for the past 4 decades and an IT boom over the last 3.
Why are we so poor at coming up with technology and products that the world wants? I am not smart enough to answer that question, but I am well read, and I can tell you that it’s WRONG to blame the Indian startup ecosystem. The VCs are just investors who need to show a return to their LPs and there’s no Indian LP that’s going to be ok with taking a slightly higher risk for an outsized bet that will only pay off after 10 years with small probability of success. Hence the drive towards more apps that just work on the backs of unskilled labour and squeezed timelines.
How do we begin to address this problem? Look at the top 2 innovation hubs in the world today. American and Chinese innovation is what is driving almost all sectors that matter. How did they get here? With the Americans it was primarily an advanced economy with an insatiable appetite to improve productivity that led to the late 70’s garage startups across Silicon Valley. The Chinese on the other hand chose to create “champion” industries with a long-term plan (not to be confused with the Korean model of champion business houses/conglomerates), like EV’s, Solar panels, Battery technology etc.
What can we, in India, hope for? We know waiting for the government is a lost cause. To be fair to them, they do have much higher priorities. Neither do we have a thriving domestic economy that can consume the level of technology that we need to become innovation powerhouses. Don’t get me wrong! I do understand we are in the top 5 in the world, but a massive chunk of our economy is not mature enough to consume technology beyond a certain threshold.
I do see a silver lining in the defence sector though. Companies like L&T and Tata Sons are doing impressive work and maybe that can serve as a model for other sectors too. The government can help with very generous tax breaks for a set of champion companies (yes, we are back to the South Korean model) and encourage them to create an umbrella of OEMs, startups that can work on specialized areas. I think conglomerates like above mentioned, are more mature and can deal with complexities involved in a multi layered supply chain (be it components or software) simply due to having deep pockets and impressive managerial and engineering talent.
They would still face regulatory hurdles, legal challenges (in case of acquiring of let’s say, land, to build advanced batteries) but that happens at a stage when the pilots are successful! Right now, we don’t even have pilots (or MVP’s as we call them in our startup lingo) necessary to prove our capabilities across sectors.
The initial mandate then, must be for the said participants to demonstrate viable prototypes, robustly tested to global benchmarks in a limited timeframe. Unfortunately, in a country of our size and diversity, this CAN NOT be done by a loosely cobbled up bureaucratic group putting out an RFI. It must be conveyed to a chosen few and then, with oversight of the plans and milestones, let them figure out whether it’s even worth their while and however they would want to execute it.
There will be complaints about nepotism but then in a country of 150 crores, everybody complains about something all the time. We have tried disastrous policies for decades. Why not give this model a chance? What’s the worst that can happen? the GOI loses a few hundred crores in tax revenues (tax breaks) and the conglomerates take all the risks. Also, only those companies that understand risk management will even attempt these, implying a level of self-selection. There would be sectors or areas, however, that most of them would assume having the best potential ROI and might all rush into it but then at least those few sectors will see greater competition and potentially world class products.
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