Industrial licensing killed indigenous development. Despite government funding and import protection policies, scientific research in India rarely resulted in saleable products, writes Ramjee Chandran. We blew past India’s National Science Day on February 28 — so named to celebrate the discovery of the Raman Effect by Nobel laureate, Sir C.V. Raman. Deservedly, we must acknowledge and celebrate this great scientist, as we must others including Bose, Chandrasekhar, Ramanujan, Khorana; and the lesser known science stars. But as with everything Indian, it satisfies our sense of achievement to bask in ethnic affinity with these men — but not ask the follow-up question, “And then…?” Probably because we know the killjoy answer would be, “And then, not much.” Recently, speaking to a group of startups, prime minister Narendra Modi stated with an unmistakable tone of pride that India’s ranking in the Global Innovation Index (an annual whodunit of the World Intellectual Property Organisation) has “improved” to #46. And though it may come as a shock to many that India is ranked #46, behind Malaysia, Vietnam and the United Arab Emirates and that even in Group 3 (lower middle income countries), we are #2, behind Vietnam, it is neither a shock nor surprise to me. With all our bombast, boasting and tireless references to “Sir C.V.”, the question is, why did we end up like this — also-rans in the league tables of science and technology innovation nations? Here’s my take. Right through to the end of the 1980s, all economic activity in India was possible only by obtaining government licence. Industrial licensing, and currency and import controls, were routine in India’s centrally controlled economy. Central planning was designed to protect local manufacturing, discourage imports and prevent capital flight. It followed that the mantra of self-reliance should extend to technology; and to this end, there was token investment in R&D projects attached to schools of science. Under central planning, detailed procedures for vetting applications for licences were designed in the belief that industry and business would resort to frivolous and “unnecessary” economic activity, if they were not controlled. Therefore, there were constant cat and mouse contests between business and government. Business tried to find loopholes and the government tried to plug them. Unsurprisingly, industrial licensing killed indigenous research and development. Despite government funding and protectionist policies against imports, scientific research in India rarely resulted in the development of saleable products. True, rockets and bombs were designed by isolated R&D establishments, but it was hard to find any product of value to the general public developed in Indian labs. Most products we manufactured were based on technology bought or licensed from foreign shores. Instead India Inc obtained licences to import foreign technology for items like scooters, cars, agricultural machinery, white goods, and practically everything else, while government scientists were being funded for R&D. Under the licence-permit-quota system there was no reward for innovation. For business, the goal is to employ tech and resources to manufacture products that are tried, tested and reliable. There was…
