India has the potential to become the Silicon Valley in the next 5 years but it needs to do more for expanding the innovation ecosystem, World Bank India head Junaid Kamal Ahmad has said.
Ahmad raised a very pertinent point of the under-developed innovation ecosystem in the country that aspires to become a middle-income nation.
"I think we can do a Silicon Valley in India in the next five years..as the world is changing, we can leapfrog," Ahmad said while releasing a World Bank report on innovation in developing countries.
According to the report, investments for innovation often consist of marginal improvements in process or products, rather than significant technology adoption or new product imitation.
While such investments help drive returns initially but over the long run they fail to bear fruits due to the lack of complementary factors.
"...if a firm (or country) invests in innovation but cannot also import the necessary technology, contract or hire trained workers and engineers, or draw on new organizational techniques, the returns to that investment will be low," said Ahmad.
According to the report, investments for innovation often consist of marginal improvements in process or products, rather than significant technology adoption or new product imitation.
But in order to get a sustainable boost, the policy maker's conception of the national innovation system must go beyond the usual institutions and policies designed to offset standard innovation-related market failures, highlighted Ahmad.
An earlier analysis by the World Bank also highlighted the need for a proper innovation ecosystem for India to join the ranks of middle-income countries.
India has leaped over 30 positions in the recently released World Bank's ease of doing business rankings report.
Major reforms and policies introduced and implemented under prime minister Narendra Modi have helped uplift growth and boost overseas investor confidence in the Asia's third-largest economy.
But in order to sustain growth, India needs to widen its reform scope aimed at resolving issues related to credit and investment and enhance the competitiveness of India's exporting sector, the World Bank report said.
