Innovation Policies and Trade Development in India: An Overview
Agarwal, Surya Prakash
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There is a growing interest and literature available about the linkages of science & technology and innovation policies to the trade and investment patterns in most of the developed and some of the advanced developing countries, but very limited studies are available for developing countries such as India. Further, technology and innovation are being increasingly considered by economists as an important factor of production and competitiveness in a knowledge driven economy in globalizing world. At the same time, technological and innovation strategies and capacities are being integrated and complementary to the national development strategies, regulatory and economic or sectoral policies, and to the corporate business strategies and entrepreneurship at firm level. The present paper briefly overviews S&T and innovation policies, and examines their linkages with foreign trade policies and export performance in India. Science policy of 1958, Technology Policy statement of 1983, and S&T Policy of 2003 of Government of India have generally guided the objectives, strategies, and thrust for development, applications and diffusion of Science and Technology in India. There has been a clear shift from focus on development of science and scientific capabilities to indigenous technology capability building towards import substitution and self reliance to focus on new and emerging technologies and technology intensive exports over the period. As a follow up, several new institutional mechanisms have been set up and programmes to support R&D and innovations in public funded institutions and industry were evolved. However, these policies have been more of intent in nature than regulatory and specific. An Innovation Act 2008 (Draft) has been prepared by Department of Science & Technology and placed for comments or views of the public before bringing to parliament. This Draft also seems to be limited in scope and vision and does not adequately address the emerging issues in industry and foreign trade. Protection and utilization of public funded IP Bill 2008 has been passed in Parliament to encourage IP generation, protection and use. The Patent Laws have been modified generally in line with the TRIPS Agreement of WTO. The New industrial and Foreign Trade Policies evolved in 1991 and modified from time to time have been dynamic and addressing the concerns of national development, trade and industry towards enhancing industrial competitiveness, exports, investments, and Growth in a globalizing world and emerging world trade mechanisms such as WTO, RTA/FTA. As a result, national annual economic growth of about 8-9% has been consistently achieved during past few years and a growth of 7% is expected in the current year of 2008-09, India's export share has increased to about 1.5% from 0.8% percent in world exports. Computer software exports have accounted for about 25% of total exports. However, the exports continue to be predominantly in resource based, labour intensive and low technology based products and services. Manufacturing competitiveness is a matter of serious concern to government, and technology has been identified as a major driver for competitiveness. An analysis shows inadequate linkages of science, technology and innovation policies with the foreign trade and investment policies, and also of R&D and academics with export production facilities. There is overlapping of innovation promotional programmes and agencies, often operating at subcritical levels. The technological implications in WTO Agreements and RTA / FTA do not seem to have been fully understood, and technology transfer and technology capacity building are often voiced as constraints in most developing countries including India. The paper makes a few suggestions to improve the linkages of technology policies and mechanisms with the foreign trade policies and exports, so as to enhance technology intensive exports and competitiveness.