Models of STI Driven
Manufacturing
Dr. Nirmalya Bagchi
Professor
Administrative Staff College of india
nirmalya@asci.org.in
What to Make in India
• Low Tech
– Low CAPEX, labour intensive
– Polluting, labour issues, large land requirements, resource intensive,
High non tech barriers to entry
• High Tech
– High CAPEX, tech intensive
– Non polluting, less land intensive, highly skill intensive, highly R&D
intensive, low non tech barriers to entry
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Military Industrial Complex Oriented?
Export Oriented?
Demand Driven?
Supply Driven ?
Achieving Economies of Scale – like China ?
Innovation Driven?
Small scale, large scale, start up?
Low Technology Intensity
High Labour Intensity
Eg. Garments
High Technology Intensity
High Labour Intensity
Eg. ICT
Low Technology Intensity
Low Labour Intensity
Eg. Weaving
High Technology Intensity
Low Labour Intensity
Eg. Robotics driven manufacturing
HOW OTHER COUNTRIES HAVE
ACHIEVED MANUFACTURING LED
GROWTH
SME based traditional manufacturing:
Germany
• Mittelstadt
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Small town in Germany
SME hub of Germany
99% classical industrial era companies
Provides 60% of employment in Germany
No nanotechnology, no biotechnology, no ICT just plain
vanilla old tech companies
Most companies in Mittelstadt have no Bank loans
Up to 500 employees and Annual Saes of up to 50 million
Euros
Stability and not growth is the focus
does not supply large customers more than 10% of sales!
Risk mitigation
Innovation driven manufacturing
growth: Sweden, Finland
• Robust linkages between Industry ad Academics
• Great facility for prototyping, test sites and
demonstration
• Challenge driven R&D and Innovation leading to High
Tech manufacturing
• Leveraging public R&D spending for Innovation
• Involvement of end-users early in the process
• Increased demand for cross collaborations
• Open processes
Start up led manufacturing growth:
Israel
• Israel is a start up nation. Produces more start ups than Japan, China,
India, Korea, Canada and UK
• Attracts 30 times more venture capital investment than Europe
• Attracts twice as much venture capital investment per person than the US
• It has more tech companies on NASDAQ, a tech oriented stock exchange
than all of Europe, India and China put together
• A recent survey published in Ivey Business journal reports that
– while high tech proliferates in Israel traditional industries are R&D
averse. 57 % of such firms operate in low tech and medium tech and
do not have any R&D division, 20% do not invest in any R&D, and 25%
have no R&D personnel.
• This disparity has been acknowledged in the comprehensive “Israel 2028”
policy report which advocates a dual economy.
• Innovation is also acknowledged as a stimulus of economic growth
• OCS
• More than 50% of the start up companies employ
people from elite military units in management.
• Preconditions for government entry
1.
Market Failure Conditions
2.
Government as a Catalyst
3.
Share Risk (Lowered Risk)
4.
Predetermined Exit Conditions
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No Government Control
6.
Indirect Investments (Funds)
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Partnering with experience groups
• R&D Fund
• Grants up to 50% of R&D expenditure.
• If R&D fails, no repayment, If R&D succeeds, 3-4% of sales as
royalty
• Each year 1000 projects are taken up and about 500 companies
are given grants, ~2000 requests per year
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Supports competitive R&D of mature companies (SME’s as well
as big companies)
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Target: establish and develop substantial industrial R&D
infrastructure
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Grants between 30-50% of R&D plan, royalties payments obligatory upon success
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Acquisition and transfer of knowledge due to special approvals
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Budgetary platform for all bilateral parallel agreements
• Technology Business Incubators
• Pre Seed and Seed
• Nascent companies to start up stage
• 24 Incubators
• 2 Industrial Incubators
• 1 Biotechnology incubator
• 8-10 projects in each
• Grants- up to 85%
• Complimentary Programs
– BIRD etc.
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Magnet Generic R&D
• Supports consortia of industrial companies and academic institutions.
• Target: jointly develop generic, pre competitive technologies or dissemination
existing new technologies.
• The technology cannot be acquired from commercial sources at competitive
prices
• Grants of up to 66% - no royalty repayments
• Magneton, which is a scheme for promoting technology transfer from
academic institutions to industry.
• Noffar, which is a programme to support applied academic research in biotechnology and nano-technology in order to promote the transfer of
technology in these areas.
• Tnufa, which encourages and supports technological entrepreneurship and
innovation at the early stage i.e. pre-seed stage. The assistance is given to
individual inventors and startup companies.
OCS Government Support Programs
Pre-Seed Generic R&D Competitive R&D Cooperative R&D
TNUFA
Technological
Incubators
NOFAR
International
KAMIN
Applied Academic
Research
MAGNET
Industrial
R&D
MAGNETON
Long-Range
R&D
ISERD
(Europe FP)
Bi-national Funds
Bi-national
Agreements
EUREKA
Galileo
Global Enterprises
R&D Collaboration
Framework
Basic R&D
Market Proximity
12
Mixed industry cluster based
approach: France
• Public research : more than 166 000 employees,
including 99 000 researchers
• Private research : more than 221 000 employees,
including 129 000 researchers
• 83 universities and 100 engineering and business Schools
• More than 30 research establishments
(e.g. CEA,CNRS, INSERM, INRA, INRIA, CEA, CNES…)
Competitiveness Clusters
• 71 clusters in biotechnologies, materials, energies, chemistry, aeronautics,
electronics, pharmacy ...
• Targeting identified markets
• 3 types of partners : industry, public research and higher education
CARNOT
• 34 public research institutes showing significant interactions with industry
• 17 000 full time staff
• 6 500 PhD students
Model for India
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Both Low tech, high labour and high tech high labour to create ripple effects in
both directions
Creating space for SME
– Defence production, niche technology capability, Design capability
– Barriers to entry
– Promoting Cluster Development
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Tech Innovation driven, start up driven
– Need a framework for government financing and advising start-ups and SMEs with provision
for equity stake in return.
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Need an entity with new rules and practices
Need new practices and rules of audit
– Culture of Innovation and Entrepreneurship in
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Colleges, Institutes and Universities
R&D institutions
Industry
Leveraging R&D base for tech development and innovation
– Need an organization that liaises with S&T as well as Industry including start-ups, SMEs and
large firms.
– Competitive funding schemes
– PPP
IP value
Govt. Support HE
PPP’s
Govt. Support S&T
Govt. Support New Entity Commercial?
Basic Research
Applied Research
Tech Development
Stages and Time
Manufacturing
Thank You