Channel: Management

Tuesday, May 18, 2010
Innovation in India
Sanmit Ahuja discusses with Mr. Pradeep Gupta, Chairman and Managing Director of Cybermedia

Sanmit Ahuja discusses with Mr. Pradeep Gupta, Chairman and Managing Director of Cybermedia, South Asia’s largest specialty media house, on what is the state of innovation in India.


On the state of Innovation in India


India was never really on the innovation map until recently. Looking back the scenario right up until the early 1990s there was always an East-West divide in terms of where India would source its innovations from. The thinking in India was that its only real contribution to the world was the “zero” [literally].


Companies would import machinery/products and re-engineer those using screwdriver technologies to create a low cost substitute for the Indian market. However in the 1990s the situation took a remarkable turn, so much so that only fifteen years later India is now seen as an innovation hub.


On what factors are driving the growth of innovation and entrepreneurship.
There are four major factors that are really at the heart of this progressive trend. These are:


FACTOR #1: Risk/Reward Ration
In the earlier days companies used to reverse engineer products because they knew that the costs of running a business in India were very high. Debt was expensive and scarce thereby forcing companies to only think of short term cash flow and go for the low hanging fruit. Investing in R&D or innovation wasn’t really an option since it entailed long term investing.


However with the strong economic growth the situation today is much different. The risk taking abilities of companies has increased and so have the levels of rewards.


FACTOR #2: New customer segments
With the help of technology and globalization many new customer segments are being created. Management Gurus have coined many new terms for these segments. For instance the term “Bottom of the pyramid” refers to the rural Indian population, “the long tail” refers to long term and sustainable income streams, “the world is flat” refers to the huge consumer base in developing countries.


The new segments not only expand the market size but also provide a whole new context and setting of testing products and services in developing countries. Nations such as India and China are also acting as the test labs for global companies.


By developing products of high quality and standards in these markets global companies are re-defining their price points and are now able to export their products from India to other economies. For instance Tata motors successfully developed the Nano, which is the cheapest car in the world that also has a huge potential for export.


FACTOR #3: Improving the Innovation Eco-System
The improvement in the innovation eco-system has also a huge ramification in the level of entrepreneurship which is at unprecedented levels in India.


FACTOR #4: The Economic Growth Rate
The overall economic growth of the nation is throwing many more opportunities towards investors on a daily basis. For instance the mobile market in India has seen a stellar growth rate with almost 9mn new subscribers being added every month.


On the investment opportunities in the media sector
The media sector is going through rapid transformation. The adoption to cross-media platforms by major media hoses has been much faster and rapid unlike the western countries.


The major opportunity lies in the ability to leverage and exploit multiple platforms such as online, print and digital to distribute content.


On opportunities in India for international companies
Foreign companies cannot afford to not have an India strategy. It is the fastest growing free market economy in the world. For instance the Cloud Computing phenomenon is ripe for take-off in the Indian market. The Indian SME is cost conscious and would find such a service of huge importance and benefit.


On major impediments to growth
Indian companies still lack the skills to develop and exploit intellectual property. Although the situation in this area is improving, it still has a long way to go.


The poor infrastructure in the country is also a major impediment and so are some of the policies that aren’t conducive to attracting more private sectors capital.


The biggest impediment however remains the lack of early stage risk-capital. This is where international investors can really make an impact as well as earn a high return on investment.


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