Appropriate measures to stimulate innovation through competition can trigger a five-fold increase in India's gross domestic product (GDP) and make the growth process more inclusive, the World Bank has said. India's current GDP is estimated at around $ 1 trillion (Rs 40,00,000 crore).
The new World Bank report "Unleashing India's Innovation", released on Thursday, said while there were many islands of excellence in India's heterogeneous economy, the country could do much more to reach its full potential, especially by bringing the benefits of innovation to the poor.
Mark Dutz, World Bank Senior Economist and editor of the report, said research and knowledge needed to be better converted for commercial use.
"The output of the economy could increase more than five-fold if all enterprises achieve national best practices based on knowledge already in use in India," Dutz said.
He said of the top 50 applicants for patents in India from 1995 to 2005, 44 were foreign firms.
The report said despite India having the largest systems of higher learning, it may face a deficit of 0.5 million workers by 2010. It recommended larger fiscal and managerial autonomy of universities and colleges and suggested greater private participation in higher education.
The report said actions were needed to promote commercialisation and to strengthen links among industry, universities and public R&D laboratories. These could include providing support to technology transfer offices, creating a patent management corporation, strengthening innovation infrastructure, promoting angel investing and early stage pre-venture capital financing.
"India will especially benefit from fostering more inclusive innovation. This could be achieved by promoting more formal R&D efforts for the poor people as well as by improving the ability of informal enterprises to better use existing knowledge," it said.
Dutz said existing pro-poor initiatives needed to be scaled up. "Government programmes should promote more knowledge absorption in the productive sector and help extend the power of innovation to the common man," he said.