Making Innovation Work for India's Low-Carbon Future

Making Innovation Work for India's Low-Carbon Future

Ajeya Bandyopadhyay, Senior Operations Officer, IFC, 0

India’s pledge to achieve ‘Net-Zero’ transition by 2070 is laudable yet quite ambitious. At COP 26, as in the previous COPs, India negotiated hard for an enhanced technological and financial assistance from the developed nations to aid this transition. However, among many others things this also calls for strengthening our national innovation system.

According to the OECD patent database, green-tech, accounts nearly 13 per cent of India’s high-value patents, which is in line with the world average. In 2017, India filed 2505 greentech related patents whereas, in the same year, China filed 16,000 of such patents. Nearly 75-80 percent of the world’s green patents are concentrated in a few nations viz. US, Japan, China and South Korea. Another study shows that, in clean energy public R&D investment per $1000 of GDP, it is Finland that tops the list investing an equivalent of $0.81, followed by Norway at $0.69, US at $0.33, China at $0.13, whereas India stands at $0.03. US deploys largest volume of public funding for clean energy RD&D in absolute terms, investing about $6.8 billion, more than Japan, Germany, France, and UK combined, and followed by China at $3.8 billion in 2018. US is also the largest spender in energy-related basic science research, both in absolute terms and as a percent of GDP investing over $3 billion in 2018, more than 10 times the global average. In many of these indicators India ranks somewhat in the middle. A robust innovation system, therefore, will have dual benefits - it will drive more and more indigenous innovation towards frontier while bolstering our capacity to absorb and diffuse new innovation leveraging advances in the global technology ecosystem.

A few systemic issues perhaps need closer attention.

a.R&D Expenditure & its Effectiveness:
Though India was ranked 48th among 131 innovating countries in the Global Innovation Index (GII) 2020, recording a major jump from 81st in 2015, India’s gross expenditure on R&D (GERD) stands at 0.65 per cent of its GDP, which is much lower than the 1.5-3 per cent of GDP spent by the top 10 economies. According to the UNESCO Science Report (June 2021), though the absolute R&D expenditure has risen consistently in India over the past 14 years, ‘Research Intensity’ (ratio of GERD: GDP) remains stagnant - India’s share in total patents filed was 36 per cent, compared with an average of 62 per cent in other large economies. Moreover, Indian industry’s contribution to GERD remains at 40-42 per cent compared to that of 68 per cent, which is by and large the average for top 10 economies. This calls for substantial increase of GERD while improving the ‘ease-of-doing-research’ in Indian research institutes by cutting down bureaucratic complexities, widening their global network and making research more outcomes oriented.

b.Scientific Human Capital:
Today, quite encouragingly, Indian researchers are publishing more than the global average on topics such as climate-resilient crop production, sustainable energy and cleaner transportation. For example, Indians are publishing between 1.5 and 1.8 times the global average on smart-grid technologies, improved battery efficiency, photovoltaics, biofuels and biomass and wind turbine technologies. However, we still suffer from a chronic shortage of scientific officials, with application-oriented skills, capable of translating out-of-the-lab research into technological outputs. Indian businesses employ 30 per cent and 34 per cent per cent of R&D personnel and researchers respectively, compared to that of 58 and 53 per cent, employed by businesses in top 5 economies of the world.

c.Emerging Deep-Tech and Risk Capital:
Deep-tech is the latest buzzword in innovation. Deep-tech technologies combine breakthrough science with new approaches in machine learning, data science, and cloud
computing and cleantech, nanotech or synthetic biology bring forth radical and pioneering solutions to real-world problems. For instance, there is a start-up which developed a plant-based coating that can extend the shelf life of fruits and vegetables, cutting food waste as well as the need for refrigeration and plastic packaging. Another promising example is a precision Agri Tech solution which analyzed the soil’s DNA to help farmers enhance bio-fertility, prevent pests and diseases, and apply fertilizers more precisely. The challenge however is that, such deep-tech initiatives– involve exceptionally complex and long-term R&D, in addition to the right revenue model to scale. Unlike startups in digital or software-based sectors, the path to scale for deep tech companies takes longer and requires patient risk capital. Enhanced public funding and engagement of impact-focused funds will be important for early-stage funding, risk guarantee and/ or risk sharing facilities to scale-up deep tech pilots. Also important is that Indian industries’ support in the form of Corporate Venture Capital (CVC) contributing the so called ‘patient capital’ to help grow deep-tech ventures.

The need of the hour is, therefore, a more comprehensive innovation policy, that aligns well with the country’s industrial and trade policy and helps embedding ‘climate innovation’ at the core of various national missions, augmenting research funding, and scale and multiply R&D infrastructure

d.Technology Intermediaries:
Emergence of deep-tech indicates the fact that going froward R&D and innovation will be more collaborative, cross-disciplinary and combinatorial (across various technology domains), whose success will be driven by the strength of its ‘eco-system’ not by the excellence of individual instittuions. Large-scale investment must pour in, preferably in PPP mode, to develop incubators, accelerators and live labs. There are estimated to be around 2,000 technology incubators and 150 accelerators worldwide. However, fewer than 70 are estimated to be climate-technology focused incubators and accelerators, and just 25 of the 70 are in developing countries (UNFCCC report). Given the astounding success of India’s start-up journey this number should go up faster.

e.Technology Clusters:
Just like PLI scheme for solar PV, advanced chemistry cell, Government can extend incentives to localize greener value chains, such as biofuels, H2-electrolyzer, energy-efficient appliances, HVAC in the country and attract more technology-intensive FDI into these sectors by offering better IP protection. In parallel, appropriate tariff adjustments will make indigenous manufacturing of low-carbon products and their ancillaries more competitive to participate in the Global Value Chain. Forming dedicated technology clusters, like the planned CCUS cluster in UK, with integrated facilities for R&D, rapid prototyping, product design, development and testing and manufacturing will help to create necessary networks that test, pilot and promote new technologies and make new technology-products marketable, both nationally and internationally. This will help building regional manufacturing capacity and reduce our heavy import dependency in components of solar, wind, EV etc.

The need of the hour is, therefore, a more comprehensive innovation policy, that aligns well with the country’s industrial and trade policy and helps embedding ‘climate innovation’ at the core of various national missions, augmenting research funding, and scale and multiply R&D infrastructure. More importantly, we need more innovative way of cooperation, globally and regionally. There is a growing recognition of the potential of South–South cooperation (SSC) and triangular cooperation (TrC), as against the traditional North-South cooperation (NSC) to facilitate technology development and transfer for climate action in developing countries under the Paris Agreement. We should leverage this emerging and exciting opportunity.