Saturday, January 06, 2007

Why Invest in India: Innovation & Creativity

India has now regained its innovative spirit. As a result, creativity can be seen in all walks of life in India. In the post license raj era, Indian companies have discovered the benefits on innovation and creativity. Sectors such as software, computers, microelectronics, automobiles, Aerospace, telecommunications, biotechnology, Medicare, pharmacy, entertainment, construction, heavy engineering and others have greatly benefited by the spirit of Indian innovation.

India has a long history of creative thinking and Innovation

Barring the dark ages of the British rule, India has always been the hub of innovation, invention and creativity. Creativity in India can be seen in diversity of its languages, classical arts and music, literature, folk arts, construction etc. To highlight the historical fact of Indian creativity consider this: India has five forms of classical dances, two forms of classical music, four major religions of the world originated in India, twenty five languages - kanada and telgu being the most developed languages. ( In these languages, what is written can be exactly spoken - i.e., there are no tones, or silent letters etc.). And that beats any other country in the world. (i.e., no country in the world can boast the same)

Unfortunately during the British rule, the very foundations of Indian creativity were disturbed. The traditional education system - the "gurukuala" was destroyed. The ecosystem for innovation was destroyed. And that resulted in the dark age of Indian innovation. Yet the culture of innovation survived and is now coming back with a great force.

India has now rebuilt its innovation ecosystem

The culture of innovation comes from the attitude of people and the work environment. On a broader scale, it is dominated by the economy, external environment and the support infrastructure. The policy of the government and freedom are probably the biggest factors that contribute towards this cause.

A strong pillar for innovation is capital: Both human and money.

One of the earliest acts of the newly independent India was to create the foundation for scientific and engineering education. Over the last sixty years, India has built a strong and a robust educational system - which now graduates millions of students every year.
Indian stock market and democracy has taken deep roots in the society. Reliance Industries Limited (RIL) was one of the first companies to use the strength of Indian capital markets and build the world’s largest petroleum refinery. Earlier RIL created the world record by having the largest number of individual shareholders for any single company - a feat unsurpassed by any company till date. Having a strong capital markets is essential for innovation. Suzlon, Dr. Reddy Labs, Ranbaxy, Cipla, Biocon, Barth Forge etc, all have tapped into the strength of Indian stock market to raise the required capital for their business enterprise.

Government policy and research assistance in form of large R&D centers, PSU, organizations have created the necessary infrastructure to capitalize on for further innovation. ISRO, BARC, IISc, IITs, CPRI, etc., have become incubation centers for innovation. To highlight the value of Indian research centers consider the mission statement of Society for Innovation and Development (SID) at IISc:

"The mission of SID is to enable India's innovations in science and technology by creating a purposeful and effective channel to help and assist industries and business establishments to compete and prosper in the face of global competition, turbulent market conditions and fast moving technologies. SID strives to bring the leading intellectuals of IISc and the fruits of their research and development efforts closer to industries and business establishments in a cordial atmosphere with prosperity of the Nation as the ultimate goal."

Indians will invent, innovate and create

Unlike Europeans or Americans, Indian approach to innovation, invention and creativity has been very different. Indians tend to opt for cost effective innovation - without wasting capital or resources.

Indian advances in space technology, nuclear science, IT, computers, Automobiles, pharmacy, manufacturing etc., have repeatedly shown that invention in India costs a fraction when compared to USA or Europe. Mahindra & Mahindra developed its best selling SUV - "Scorpio" at one-tenth of what it would have costed Ford or GM to develop a similar vechile. "Saras" - a passenger plane developed by NAL costed only $11 million!

Indian penchant for cost effectiveness is demonstrated in its innovation culture. As a result, the world is now turning to India for all creative work.

World now turns to India for creative work

Some of the biggest brands in the world - like Coca-Cola - are now turning to Indian creative types to manage their online advertising campaigns. What's more, even luxury brands are no longer deterred from using Indian talent, as this example using Alfred Hammel illustrates:


"Typical of ad outsourcers is niche luxury brand Alfred Hammel, which pitches $10,000 Swiss watches to Americans and Europeans in tony magazines and newspapers. Looking to cut marketing production costs, two years ago the New York-based company handed its ad account over to Banerjee & Partners, an agency specializing in outsourcing work to India.

The watch company's president, Gurbakhsh Sethi, meets with Banerjee staff in New York to plan strategy and sign off on designs, slogans and creative ad themes. Behind the scenes, Banerjee's staff in Bangalore, India, does art direction and color correction on the photos, which were shot in New York. The finished work is sent back to New York over the Internet. Dave Banerjee, the agency's founder, says his U.S. team, which works in morning and afternoon shifts to take advantage of the time difference, works closely with the Indian team throughout to process "to ensure that the work reflects the right cultural nuances."

The bottom line appears to be cost savings: according to the Wall Street Journal, some firms in India charge as little as one-eighth of what it might cost in the U.S. Add to that, Indian firms are becoming more sophisticated, especially when it comes to rolling out online campaigns that can really leverage world-class Indian technology talent.

Even the Chinese firms: Lenovo and Heuwai are establishing R&D centers in India. (see: http://www.siliconindia.com/shownews/34519 )

Cisco is shifting 20% of its workforce to India. (By shifting, I mean Cisco will hire more in India and also encourage other employees to relocate to India). See: http://www.deccanherald.com/deccanherald/jan82007/business223331200717.asp

Closing Thoughts

The great brain drain from India in the 1990s was stemmed after the dot-com bubble burst at the end of the last century. Much of that talent has now returned to India and is being used to grow India's contribution in pharmaceuticals, telecom, and software. Ideas, manpower, and money add up to tremendous innovation occurring in the country right now.

Global business giants have realized the innovation potential in India and have started investing in India. IBM, GE, Microsoft, Cisco, Intel and sixty other top innovating companies have already setup their R&D centers in India. These investment will further create an experienced talent pool which will inturn attract the best talent from other parts of the world as well. Companies investing in India for establishing their R&D centers will reap rich rewards through creating of innovative products and solutions.

Also see:

The Great Indian Renaissance. Written by Dr Manmohan Singh
Why Invest in India: Resurgent Economic Growth in 2007
Why Invest in India - Banking
Why Invest in India: Booming Air Travel Industry
Why Invest in India?

6 comments:

daniel said...

Good article…I am interested in investing in the growing market in India and have been for a while now seems like the perfect time. I would recommend this article to anyone feeling the same way.

Investing in India

Enjoy…Cheers!

anu said...

The articles you write are very informative can I please have your email id

davidbaer said...

What I like about small business owners is that they are not afraid to take huge risks and lay it all on the line. But, I agree they do need a lot of help with their marketing. I think having them go the social media and email route is not only the least expensive but its also the most effective. Thanks for the stats!
With Facebook and Twitter being among the leaders of the Social networks, marketing as a small business is being transformed..
Respondents according to the Vertical Response survey appear to need some differentiation with the use of SE marketing and Social media Marketing

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Ambrish said...

Hey Arun, it may sound bizarre, but I am looking to raise money to start a chain of resorts in India. Would you be able to help me raise this or connect me to someone in India or abroad who can help me raise money? My email i is ambrishjha@gmail.com

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