1. Opening ambit as appropriate.
2. I am sure you will agree with me that as we move on to the year 2009, the issues that confront us are vastly different from those that confronted us during the beginning of 2008. The Indian economy was then gung-ho; the Sensex was near its peak of around 20500; oil was over $100 a barrel; and foreign direct and institutional investments were at their peaks. A Tsunami of unprecedented magnitude has now devastated the global financial systems and given the interconnectedness of the global financial, trading and economic systems, it has had its virulent effect on our financial markets and economic well being as well. More than $11 billion of foreign institutional investor funds have been withdrawn; the Sensex slipping to almost half of its value; debt hard to come by and quite expensive; and raising equity next to impossible. I have received distress signals from several small innovative companies in the biotech sector for a financial bail out in the short term. The times for new entrepreneurs to enter the arena are tough but as the popular song of twenty years ago goes, “When the going gets tough, the tough get going”. This is a true test of entrepreneurship also – the best time to be an entrepreneur is now, when the chips are falling down, the reason being the fundamentals of the Indian economy continue to be sound. There are at hand investment proposals worth around Rs. 5 lakh crore, i.e. new investments of more than Rs.5000 per every person in the country – imagine what it could do. Thus, when we talk about the challenges facing the entrepreneurs today, we need to have a different kind of construct – a different equation.
3. Let me begin by clarifying a few misconceptions that almost we all have about entrepreneurship. The first one is that entrepreneurship is an individual initiative. I would say that entrepreneurship is more successful when performed by teams. A study done in USA of start-up companies and their probability of success found that the probability of success of a company increased dramatically with the team size until you got up to four or five entrepreneurs founding the company; and teams of people with complementary skill sets perform better. For example, if a scientist or technologist partners with someone who knows the capital markets and another person who knows how to sell technology-based products, the team of three will have a much higher probability of success than a solitary technologist trying to start a company.
4. The second is that finance and not technology is the cause of start-ups folding up in large numbers. New or start-up companies typically need more money than what the entrepreneurs have originally planned for. Start-ups more often fail as they run out of money than because their technology has problems. Start-ups that have investors with “very deep pockets” will succeed more often than not.
5. Thirdly, I believe that the success of an entrepreneur is a function of how harder he works, how smarter he works, how much leverage he creates on the work he so does, how much courage he has and of course, most important of all, how passionate he is towards his enterprise. The key determinant thus is the passionate behaviour of the founders. Entrepreneurs who lack passion will use the first barrier they come upon as an excuse for their failure. Entrepreneurs who have high passion will do whatever it takes to overcome those barriers and most often will succeed.
6. My friend Sam Pitroda who heads the National Knowledge Commission has identified that lack of infrastructure support for innovation and entrepreneurship in India is a key stumbling block. A survey by the National Knowledge Commission has revealed that Innovation Intensity (i.e. the percentage of revenue derived from products/ services which are less than 3 years old) has increased for large firms as well as small and medium enterprises. But I believe that large companies tend not to be as innovative as the way small companies are. One of the things that inhibits large companies from developing innovative technologies is their lack of flexibility. The survey also found that strategic prioritization of innovation as a factor critical to growth and competitiveness has also achieved significant prominence since the start of economic liberalization in India.
7. I am sure you will agree when I say that India has experienced a renaissance of sorts in the last 15 years. After the initial burst of energy, enthusiasm and entrepreneurship in the early years after Independence, during which India broke decisively from over a century of lack of economic development and progress, the country experienced nearly two decades of economic crisis and lack of confidence to compete. Those days of diffidence are happily over now. Innovation and entrepreneurship are taking place at a rapid pace today. We have a proud record of innovation in a number of fields, e.g. satellite technology, pharmaceuticals, chemicals and more recently, automotives and software. The economic and social growth of India has made it a world focus for investment in innovation across a broad spectrum of industries. India has now regained its innovative and entrepreneurial spirit. As a result, today over 500 of global top companies have their R&D, technical and development centres in India employing over 150,000 scientists and engineers in almost all knowledge sectors such as software, computers, microelectronics, automobiles, aerospace, telecommunications, biotechnology, medicare, pharmacy, entertainment and others. This has given a fillip to some of India’s best and talented young technocrats to become first generation entrepreneurs. Their secular and visionary mindsets have addressed global competition through innovation, be it technical, financial, managerial and organizational and many of them I am sure are TiE members.
8. But these numbers are certainly less for a nation of our size and capacity. To encourage more entrepreneurship, we need to build a university structure that provides strong innovation and entrepreneurial ability. That must necessarily involve the ability of universities to interact with the market. This includes mechanisms for a university to leverage and sell its own intellectual property so that it can recoup the profits and put back them into additional research and development and provide incentives. For example, many universities in the US and Canada that engage heavily in research and development have their own intellectual property offices. MIT students and faculty, I am told create at least two new inventions on an average every day. Compare this with our situation. All our Universities and IITs collectively too do not equal this figure. As a result, there has been sub-optimal utilization of our intellectual research outputs. As you know, the US has a near ideal culture for innovation and entrepreneurship. It celebrates success and accepts failure. Also, the US has created one of the best environments for invention and discovery. At the same time, I would also argue that culturally the Japanese have created a wonderful environment for improvement. Japanese firms also have one of the best environments for stimulating team behavior. We need to learn from both these countries for Indian entrepreneurship to proliferate and succeed.
9. We are thus in the process of enacting a law on the lines of the Bayah Dole Act of USA that facilitates publicly funded R&D to license out their IP and provides incentives to the inventor for sharing in the monies realized from the valorization of the IP. Besides, we are establishing national, regional and state level intellectual property and technological management facilities to assist our academic institutions in valorization of their outputs. I would call upon TiE to take advantage of this legislation to motivate more of our inventors to become techno-entrepreneurs. I am confident that with this TiE-up, we shall be able to craft a more vibrant entrepreneurial system.
10. We are also endeavouring to accelerate entrepreneurship through public private partnerships. A few of these initiatives are a Fund for Accelerating Start-ups in Technology, Establishment of Shared facilities and knowledge based industry clusters, Small Business Innovation Research Initiative (SBIRI) and Biotech Industries Promotion Programme (BIPP) for the biotech sector and several others.
11. We are soon to launch a major National Innovation Project with the assistance of World Bank envisaging an outlay of USD 200million over a five year period, that will give a fillip to small entrepreneurs in these difficult days. The main components of the project relate to Upgrading the Innovation infrastructure; Harnessing International Knowledge and Technology; Enhancing R&D and Technology Development driven by entrepreneurial needs; Supporting early stage Technology Development to commercialize the innovative initiatives of the grass root level enterprises; and Capacity building in Micro and Small Enterprises for Technology absorption, upgradation and modernization. The endeavours in the project would be to maximize on the participation of the private sector in planning, management and monitoring, especially on building capacity for innovation and entrepreneurship in the MSME.
12. We are also seeking to bolster the innovation initiative in the country by partnering with the three overarching industry associations, the CII, the FICCI and the ASSOCHAM, who are initiating serious programmes to promote innovation in the country – in the manner that they spearheaded the quality movement. To cite an example, I had requested FICCI to draft an Innovation Law, which they have done. We in the Ministry are now endeavouring to initiate legislation for giving effect to this draft law.
13. Another aspect of our strategy is to improve the efficiency and effectiveness of the National Innovation System to deliver scientific outputs and technological outcomes of value to the economy. For this purpose, we are providing flexibilities and freedom in management to publicly funded institutions of which CSIR is a prime example. We are now permitting CSIR institutions powers to invest knowledge as equity and set up incubators and scientists freedom to establish companies and mobility to other constituents in the innovation chain.
14. Summing up I would say, in India, today we have a large and an impressive market; we have mounted massive initiatives to enhance and improve the quality of publicly funded S&T to service entrepreneurship. We are revamping our publicly funded R&D to be effective and efficient and expanding their base for public-private partnership in science, technology and innovation and we are encouraging our high-level professional diaspora to create valuable knowledge linkages and networks like TiE with our budding entrepreneurs. Besides, I feel that our economic and institutional regime can support flourishing entrepreneurship and free enterprise, which in turn can give a boost to our capital markets and economy. Whatever said and done, India today is a bundle of excitement. New activities are being initiated. New frontiers are opening up. It is time for the ‘tough to get going’.
15. Closing ambit as appropriate