Cost innovation is India's BIG opportunity: R Gopalakrishnan

The Tata Group is at the forefront of innovation-led growth in India. Whether the recently announced Rs 32,000 pre-fabricated house or the Nano car, the group is pursuing innovation across businesses. In an email interview with Firstpost,R Gopalakrishnan, director at Tata Sons, says that the culture of collaboration among Indian institutions and Indian companies has been on the rise. He says that the Tata group is not only making products that cater to the bottom-of-the-pyramid market but is also innovating in manufacturing processes at companies like Jaguar Land Rover and Tata Motors. The group is also investing in new initiatives within research and development in the renewable energy sector and in the animation arena.

[caption id=“attachment_43014” align=“alignleft” width=“380” caption=“R Gopalakrishnan, Director, Tata Sons. Courtesy Tata Sons”]  [/caption]

Top 50 companies in India are spending less than $1 billion on R&D. Indian companies now have cash to the tune of $55 billion.In your view why is it that Indian firms are not spending enough on innovation?

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

R Gopalakrishnan: I see that Indian regulations require public companies to share their R&D expenses and report figures related to R&D capital investments and revenue expenditure. These are more from a technological innovation point of view. Factors such as market research, which form a significant component of market-led-innovation, are not accounted. Another important factor which needs attention is that most of the Indian companies still have a big chunk of market (the rural India) to capture and thus a major part of the revenues are spent to enhance existing supply-chain and customer attraction processes. Further, I see that despite having low researchers per million of population, India continues its robust growth through manufacturing and services sectors, and thus low R&D investment can be viewed as a strength and not a weakness.

Having said that, I agree that still there is still a high potential of investments into innovation. The innovation survey which you referred to also mentions that about 27 percent of private firms have started improving R&D spending to accelerate new product development and innovation. This looks like a good improvement as the directional trend is positive. Further to encourage companies to spend more on R&D, and to set up more R&D centres, the government is formulating policies through the National Innovation Council. India’s two largest commercial vehicle manufacturers, Tata Motors and Ashok Leyland have stepped up their budget on research activities in the automotive space. In the jewelry industry, Tanishq is another example which has spent to understand customer needs and has innovated products to gain market share.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

Why don’t academic laboratories in India collaborate with industry, like in the US, to drive innovation?

I feel that there is a basic infrastructure missing on the government’s part to create a communication mechanism between various government bodies, which include CSIR, DRDO, IARI etc. Non-availability of sharing mechanism among these bodies has led to development of islands of information. While in Indian institutions, sharing within institutions has started through incubation within laboratories, and it would surely take time for sharing to start across institutions. The creation of the National Innovation Council is a step by the government to bridge these gaps.

The culture of collaboration among Indian institutions and Indian companies has been on the rise. Yahoo recently partnered with the Indian Institute of Information Technology (IIIT), Hyderabad, to accelerate research and development in cloud computing. Recently, PepsiCo India and the Punjab Agricultural University have co-developed a tractor-driven machine to systematically implement direct seeding of rice (DSR), an eco-friendly technique that can reduce water use in rice paddies by 30 percent and cut carbon emissions by 70 percent.

Do you feel Indian companies have little risk appetite to spend on new product development?

I see that Indian manufacturers have focused on delivering affordable products to previously untapped markets by innovating to lower costs and creating new delivery mechanisms. There are several examples to support this:

- Tata Motors, which delivered a car, geared toward India’s middle class, priced at less than $3,000. ~The company also setup a R&D facility with an investment of Rs. 7,300 crores to develop engines for Tata Motors and Jaguar Land Rover~. (The company clarified to Firstpost that this was an incorrect statement.)

- Tata Chemicals has invested in a Tata Chemicals Innovation Centre near Pune

-TCS has invested in 20 TCS Innovation Centers across the globe and its collaboration with Tata Chemicals led to the development of Tata Swach - an affordable water purification product

- CRL’s super-computing facility in India is unique to a developing nation

-Thanks to its innovations in outsourcing, Bharti Tele-Ventures offers some of the world’s lowest telephone prices

-In the telecom domain, the recent innovation by low-cost mobile handset product - Micromax to include a projector in the handset has seen a great response

Continue reading on the next page

- And innovations in supply chains have integrated those at the bottom of India’s economic pyramid, as exemplified by e-Choupals. These cyber kiosks, established in thousands of villages, have given farmers the power of information-eliminating middlemen and resulting in higher productivity and better prices for farmers

Therefore I do not believe that Indian organisations do not have the risk appetite for new product development. Can there be more efforts, yes as long as the investment is coupled to latent market opportunity. The government must support research in basic science (supply-side), while private sector must continue to drive market-driven innovation (demand-side). Role of government must emphasize risk mitigation for private sector’s drive for market-driven innovation.

Do you feel that India can play a role in the next round of innovation? What in your view is needed to be done immediately?

India is going to play a major role in the coming round of innovations. The development of ultra low cost products and services will not only serve the domestic markets but will also find appeal in international well developed markets. The Jaipur foot, Dr Devi Shetty’s wonderful heart hospital in Bangalore and the world class Aravind Eye hospitals are examples of frugal engineering that can be taken to different parts of the world.

India which is growing over 8 percent is a high potential market and companies across globe are establishing research and marketing centres to serve the Indian markets. In the process new products and services have been introduced and the same have gone to other countries also. The now-famous dabbawala (literally, lunchbox-carrier) system is an innovative business process that allows 4,500-5,000 semiliterate dabbawalas to deliver almost 200,000 lunches to workers every day in Mumbai. The dabbawalas reportedly make one mistake per six million deliveries.

Traditionally, innovation has been known as ‘jugaad’ in India; Jugaad - innovative quick fix, has led to cost savings and introduction of new products and services in the Indian market.The National Innovation Forum has documented multiple instances and now the government is planning to provide some sort of intellectual property protection to these innovative methods and/or mechanisms. Innovations from the rural India need attention, and public-private partnerships must take advantage of these innovations. Few innovations arising from rural Indian markets include washing-cum-exercise machine, hand operated water lifting device, portable smokeless stove, automatic food making machine, solar mosquito killer, shock proof converter, a floating toilet soap. These products are currently displayed at an exhibition organized by the National Innovation Foundation at the Rashtrapati Bhavan.

Further, with India providing greater opportunities, several Indians are willing to return to India. Thus, Indian companies and educational institutions have a critical role to play in the next round of innovation.

In an earlier interview, you spoke of the Tata Group of Innovation Forum two years ago. What can you say could emerge in the future to lead growth for the group?

Tata Group has been serving various customer segments. There are two pointers for innovation in Tata companies - one which help them to create products and services which would make them globally competitive. Example of this are technology led innovations in TCS, Jaguar - Land Rover, Tanishq and Taj hotels that serve the affluent global market segments.

Second, which help us in reaching out to the Indian market such as Tata Nano, Gold Plus and Ginger hotels that cater to the value-for-money market segment.

The Tata Group of Innovation Forum (TGIF) has initiatives such Innovista - an initiative to celebrate and recognize innovation; Innoverse - a web 2.0 enabled systems to seek, collaborate, and discuss ideas; and innometer - a methodology to assess the health of an organization’s innovation ecosystem, have been launched across many companies. The dare-to-try category in the innovista initiative recognizes failures so that sharing of best practices occurs between companies leading to an enhanced culture of risk taking.

Can you give some example of how this innovation led growth could take place in a couple of areas that you operate in?

You can expect innovations from the Tata group which help improve product and services for the Bottom of Pyramid customers as well as for the global customers. At Tata we maintain a balanced approach for spending on innovation for future and spending to meet current demands.

I would like to mention about the Tata Swach, as this disruptive innovation has made available pure drinking for the many customers at just 20 paise a day for an individual. It does not need running water or electricity and confirms to global standards on potable water purity.