The opening of the first Starbucks outlet in South Mumbai in October last year triggered quite some frenzy among Mumbaikars, with long queues of venti-mocha-frap verve translating into a major rock concert hysteria. And it was all for a coffee shop! Imagine the burst of marketing energy from Starbucks to take advantage of this excitement. Within five months of opening its first outlet, four each were opened in Mumbai and Delhi (taking the footprint of the coffee chain to nine outlets in India). It reminded me of the kind of madness that was witnessed during the launch of Pepsi and the relaunch of Coke in India, way back in the early 1990s. Here’s the simple truth – our craze for foreign brands has never ceased, despite our progress in almost all dimensions of socio-economic parameters. Why? Because as a nation, experience has taught us that our brands have never quite had the gumption of American, British, European or even Japanese brands. The halo was and is missing. This lack of unique proposition in our brands is due to the shoddy products and services offered in the name of Indian brands!
In this new age of globalisation, our brands need to compete globally and not just nationally. In the past, so many Indian brands – from the Ambassadors to the Vimals – were whipped and almost but sent off packing when foreign brands came knocking. These foreign brands piggybacked on their global popularity and our lack of expertise due to substandard innovation. If India has to reverse the ongoing trend of the influx of foreign brands into its market, it has to invest on innovation on a large scale, and frame and implement comprehensive policies to support innovation.
The low count of patent applications that is filed in India is some warning. In 2011, only 42,291 patent applications were filed in India. China on the other hand saw 526,412 applications being filed – highest in the world that year, followed by US with 503,582 applications (source: World Intellectual Property Indicators 2012, released by the World Intellectual Property Organisation; December 2012). In the Global Innovation Index (GII) ranking 2012, India stood at a dismal 64th – two spots below where it stood in 2011! Shameful it is that India, in terms of GII ranking is last amongst the BRICs. No wonder, a June 2012 Standard & Poor’s report revised its outlook for the Indian economy and warned that India could become the first amongst all BRIC countries to lose its sheen! [The S&P report was titled, ‘Will India Be The First BRIC Fallen Angel?’] It is disheartening to observe that despite Sam Pitroda’s efforts to pump life into India’s innovation machine, and PM Manmohan Singh’s call to promote India as an “Innovation hub”, the country is still largely seen as a “screwdriver nation”, only capable of assembling together parts of foreign-branded products.
It is true that a fish rots from the head. That is precisely the reason for India’s innovation lag – because our policymakers never bothered to roll up their sleeves for the cause. There is hardly any constructive policy in place to encourage innovation in the country. This year, our prime minister announced $880 million towards upgrading our innovation books, which he termed as a “game changer”, but then no concrete holistic innovation policy was either drafted or designed!
China moved ahead steadily but surely to achieve its innovation goals. It started by adopting foreign technologies and became competitive globally on the manufacturing front through price undercutting. When ‘Made in China’ products began to taste success, it rightfully moved on to the next level of innovation. In its 12th Five Year plan (2011-2015) the country has categorically stated that it would encourage indigenousness and innovation to replace FDI with investments made by homegrown industry. China is on a systematic path of progress to achieve technological, operational and marketing superiority. A few decades back, China was no more a developed nation than India. In fact, it was far behind on the development scale. The country began with manufacturing products on assembly lines; and today manufactures global brands! Today, it boasts of a number of globally respected brands like Lenovo, Haier, China Mobile and many others. In fact, it is only an outcome of working on and reaping the fruits of innovation that three of the ten largest Global Fortune 500 companies today are Chinese! Today, there are as many as seven Chinese brands in Forbes list of 100 most innovative companies, as against just two of India.
Look at Japan. The country carried an image of being a copycat up until the 1950s. When Japanese products entered Western markets for the first time, consumers in the West laughed in the face of the Japanese brands. Why? The Japanese products were shoddy, poorly designed and carried malfunctioning engines. However, persistent investments over decades that followed – by the Japanese government in Science & Technology (and R&D and innovation) – saw the country rise on the innovation barometer. Today, Toyota, Honda, Canon, Toshiba, Panasonic, Nikon, Sharp, Suzuki, Bridgestone, Fujitsu, Yamaha, Sony, Nissan and many other Japanese names are brands that every consumer is proud and happy to own – whether American or Japanese! What is noteworthy is that the Japanese were unabashed about following the American model of innovation. And this was emphasized in their official policy that their model of innovation was based on US model – a country that had always been the king of innovation for the last 100 years.
Our on-the-rocks brands coupled with the colonial hangover, have given Indian consumers a Western complex that is too difficult to shed. This syndrome has affected most Asian and African nations in the past. But unlike many other countries (say Japan, China and South Korea), India has not been able to overcome it. Our movies run well when they feature foreign locations; are considered apt for class audiences when Western culture and habits are shown – even the usage of foreign brands apparently lifts a movie to a higher class. Our music, our restaurants, even our economic policies and our education are blindly aping the West in the belief that everything of theirs is superior to ours. A Hollywood movie today is incomplete without a GM or a Chevrolet or a Marlboro or a Starbucks, unlike ours where the lead actors are seen flaunting foreign commodities!
In contrast, take the example of South Korea and Taiwan. Both were impoverished in the aftermath of the Second World War, but through their self-belief and aggressive government policies that were pro-innovation, today, they can boast of some of the hottest brands in the world. The emphasis of research concentration and R&D forms the cornerstone of their ability to produce world-class brands like Samsung, Hyundai, Kia, LG [all four are Korean], HTC, Acer, Asus, Transcend [all four are Taiwanese] and many more.
Innovation shapes economies. There is many an example that proves it. The problem is not that India did not realise this truth in time. It was that the country relied too much on foreign investments and ignored the potential of homegrown entrepreneurs. Yes, there are aberrations on the radar – like Infosys, L&T and Reliance. But these are too few to mention or feel proud about. Most critically, these big brands are also finding it very uncomfortable to survive with the Western helping hand! Today, there is no Indian automobile company that can produce a vehicle that in true sense can be called an Indian innovation. There is virtually no Indian company that produces a ‘truly Indian’ brand.
India would be biting the bullet if it depends too much on foreign brands to lift itself out of the current rut, instead of encouraging indigenous innovation. Encouraging innovation and entrepreneurship are the only two failsafe ways in which policymakers can pump growth into the Indian economy. There is much talent in India available to make our country an innovative powerhouse over the next decade – if not in the next few years. Our higher education system should incorporate the spirit and knowhow of innovation and entrepreneurship in its curriculum so that a new bunch of young entrepreneurs come up and take the world by storm, just the way the Japanese and the Koreans did... and the way the Chinese are doing today. India is not unrecognised. Its brands are. India today has got confined as a nation of service provider rather than an innovator. Ironically, we are the most sought-after nation for IT and IT related services but have miserably failed to come up with products at par with Apple or Samsung. What we need today are not branches or manufacturing units of Intel, BMW or Microsoft but an Indian answer to Cisco, Bell Labs, Ford, Apple or GM! Our innovation policy should encourage completely indigenous innovation rather than encouraging reverse engineering or smart compilation. There is an urgent need for a breath of fresh air in our economy to turn the dull table around, instantly!
- 18 April 2013 |
- Dr. Arindam on Indian Economy