Unlocking the potential of India’s high-tech start-ups

This is an excerpt of the original article. It was written for the March-April 2018 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2018

"Inflation creeps into U.S. Supply Chain.” So said the headline on a Wall Street Journal article I read this morning before writing this column. The Journal went on to write that U.S. companies are grappling with rising material and ingredient costs on top of pressure from higher wages—a potential double whammy— and noted that companies like Whirlpool and Ford have already issued warnings to the market.

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Although India is the world’s 7th largest economy and one of the fastest growing economies on the planet, it lags many developing countries— notably China—on indicators of innovation such as R&D spend and the economic contribution of high-tech manufacturing. World Bank data from 2011, the most recent year, indicates that India’s expenditure on R&D as a percentage of GDP is only 0.82% compared to China’s, which is currently 2.0% and rising. India lags on other indicators such as the number of researchers in R&D and the volume of high-tech exports. While India’s vast educational infrastructure produces huge numbers of engineers and other technically qualified graduates every year, thousands of engineering graduates move to developed economies every year to further their studies.

Countries benefit on several fronts from a strong high-tech manufacturing base. Such a base reduces the nation’s reliance on expensive imports, generates exports and jobs, and supports a healthier trade balance. Technologically advanced companies help countries to compete more effectively in high-value markets. Yet, the increase in competition and economic activity in India over the last 25 years has not translated into a commensurate jump in innovation activities.

A new study of India’s ability to support the growth of high-tech manufacturing startups (HTMs) concludes that many of the underlying reasons for the country’s relatively poor performance lie in the supply chain. Conducted by MISI, a member of the MIT Global SCALE Network, in collaboration with the Indian Institute of Management, the study aimed to answer two fundamental questions:

1. What are the factors that affect the performance and competitiveness of high-tech manufacturing startups in India?
2. How does the country improve and develop the performance of this sector by fostering growth through the design of supportive ecosystems?

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