India’s Climb up the Innovation Ladder: Policy Enablers and Impediments

Economic Policy
Written By Sarthak Pradhan

Published August 5, 2024

Abstract

This paper explores the policy impediments hindering technological upgrades and innovation in Indian firms. Utilising a complexity framework, it identifies corporations, universities, and R&D systems as key leverage points. The analysis reveals that high tax rates, uncertain policies, unfavourable bilateral investment treaties, and a lack of skilled talent hamper investments and scaling up of firms. Restrictive labour laws and limited participation in global trade further stifle innovation. The case study of India’s semiconductor ecosystem highlights the challenges faced in the chip design, fabrication, and assembly segments. To foster innovation, the paper recommends reducing corporate tax rates, improving policy certainty, attracting top talent, enhancing university-industry collaboration, and strengthening intellectual property rights. By addressing these systemic issues through targeted policy interventions, India can transition towards a more innovative and advanced industrial landscape.

 

Authors

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Pranay Kotasthane
Pranay Kotasthane

Pranay Kotasthane is deputy director of the Takshashila Institution. Pranay’s current research includes high tech geopolitics and the politics of radically networked societies. Pranay teaches public policy, international relations, and public finance at Takshashila’s graduate and post-graduate programmes.

Sarthak Pradhan
Sarthak Pradhan

Sarthak is an Assistant Professor at the Takshashila Institution. He teaches economic reasoning and researches public finance. Before his foray into the public policy domain, he worked as an educator and a telecom engineer. He has completed Takshashila's PGP in public policy and holds a dual degree from BITS Pilani.

Sarthak Pradhan
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