The India Innovation Index 2021, the third edition of the report released by NITI (National Institution for Transforming India) Aayog, has grabbed attention with its comprehensive analysis of innovation across the country. The index, which utilizes a framework similar to the Global Innovation Index, has expanded its scope this year, increasing the number of indicators from 36 in 2020 to 66 in 2021. This deep dive into India’s innovation ecosystem provides a valuable tool for evaluating and developing national innovation, offering state rankings and fostering healthy competition, all while recommending key measures to heighten innovative capabilities.
Understanding the India Innovation Index
The India Innovation Index serves as a means of evaluating and suggesting improvements for India’s innovation ecosystem. Developed by NITI Aayog in collaboration with the Institute for Competitiveness, the index ranks states and union territories based on their innovation performance.
The criteria used for the evaluation are divided into seven pillars: five ‘Enabler’ pillars that measure inputs and two ‘Performance’ pillars that measure outputs. These indicators cover a wide range of factors like the quality of education, number of PhD students, highly skilled professionals, investments in R&D, patents and trademarks filed, internet subscribers, FDI inflows, business environment, and safety and legal environment.
Report Highlights: Winners and Low Scorers
The report categorizes the Innovation Index into three categories—major states, Union Territories, and hill and North East states. Karnataka retained its top spot in the major states category with a score of 18.05, ahead of Telangana and Haryana, largely due to strong FDI attraction and numerous venture capital deals. On the other end of the scale were Bihar, Odisha, and Chhattisgarh, scoring the lowest on the index.
In the hill and North-East states category, Manipur leads, followed by Uttarakhand and Meghalaya, with Nagaland at the bottom. Among Union territories and small states, Chandigarh outperformed with a score of 27.88 ahead of Delhi and Andaman and Nicobar, with Ladakh ranking last.
Challenges to Innovation in India
The report details the challenges hindering innovation, including weaknesses in the knowledge worker pillar and weak human capital expenditure. The manufacturing sector also faces barriers due to the ‘missing middle’ issue – an imbalance caused by a surplus of tiny, informal enterprises and a lack of large, formal ones that can employ thousands of people.
Key Recommendations by the Index
The index calls for an improvement in GDERD (Gross Domestic Expenditure on R&D), suggesting it should reach at least 2% to contribute to India’s goal of a $5 trillion economy and boost its global innovation footprint. It highlights the importance of private sector participation in R&D, pointing out that countries with lower GDERD often fail to retain their human capital in the long run. Currently, India’s GDERD as a percentage of GDP stands at about 0.7%. To keep up with growth trajectories, the report suggests a shift towards R&D strategies primarily driven by the private sector.