Financing commercial Technology development- overview of Indian experience

1. Financing commercial Technology development- overview of Indian experience A.S.Rao, asrao@nic.in Advisor, Department of Scientific and Industrial Research Ministry of Science & Technology Government of India 2nd Global Forum on Business Incubation, November 8th 2006,Hyderabad

2. Agenda • Knowledge Transfer under Foreign Collaboration and TAAS of DSIR • Public funding of `private’ R&D. • Investing in Bottom-of-Pyramid innovations • Planning early stage fund in XIth plan • Risk minimization with networks

3. Knowledge Transfer under Foreign Collaboration and TAAS of DSIR • Acquired technology need always adaptation and modifications in order to become operational within the country's techno‑ economic structure and compatible with its development targets and export objectives. • Dismantling technology packages and adapting, modifying and further developing their components in order to be re‑assembled according to the country's needs and conditions is the core of successful transfer and development of technology.

4. Technology Absorption and Adaptation Scheme (TAAS) • Project of M/s Hindustan Organics Ltd., for simulation studies of the Distillation train in the phenol plant. • NGEF Project on absorption of technology for 400 KV EHV transformer and adapt same for 765 KV UHV transformer. • Project of Southern Pesticides Corpn. Ltd., for pilot plant studies on modification of the material on construction of the reactors and studies on alternative solvents used in the process.

5. Public funding of `private’ R&D • The `public' funding of `private' R&D is an acknowledgement of the fact that `technology' has both `public' aspects and `private ' aspects and they are interdependent on one another. • The `public' knowledge generated in a national lab may have only one user (apart from no users in several cases), turning the public funding inadvertently into private funding. • Likewise no corporation can hope for perennial exclusivity of their innovations in spite of patenting, the laws of dissemination ensure they leak into the public domain sooner than expected.

6. Covering the innovation chain • Public Research AICTE,UGC,DST,CSIR,DBT,DIT,DRDO,DOD,DAE,ISRO • Public funds for `Private’ R&D PATSER/HGT/NMITLI/SBIRI/PRDSF • Technology commercialisation TDB/SIDBI

7. Programme Aimed at Technological Self Reliance (PATSER) • Interactive Small Arms Training Simulator • High speed clinical analyser • Coal dry beneficiation • Low loss RF cables • Composite insulators for high voltage • ADSL/DSLAM • Authoring tool • CPE

8. Investing in Bottom-of-Pyramid innovations With economists discovering direct relation between technology change and economy growth, management gurus basing their theories of competitive advantage on innovations and world bank spreading the gospel of social development driven by knowledge adoption, the perceived importance of innovations in a national economy is snow balling at an accelerated pace.

9. Technopreneur Promotion Programme (TePP) • Supporting independent innovators with grant of max one million rupees. • 6000 ideas accessed • 1000 evaluated • 150 supported • Supports both Grass root innovators and qualified persons-doctors, engineers, start-ups.

10. Illustrations • Innovative farmer Bhanji Bhai Mathukia of Junagadh developed a small 3 wheeled 10 HP tractor. • Entrepreneur Ramesh Nibhoria developed environment friendly solid biomass Furnace , installed it at Jawahar Navodaya Vidyalaya, Nafajgarh and demonstrated the savings in fuel (LPG) consumption. • Teacher innovator Dr Jagadeesh of Kavaraiputtai developed an unique vertical cylindrical solar water heater with lotus flower shaped reflector. Retired DRDO scientist RA Yadav has taken up redesign of Surgical bandage cloth making machine. Loving mother Smt Pragnya Dilip Bhatt, determined to make her visually challenged son feel the shape of flowers, is perfecting a sketching device for use by visually challenged.

11. Planning early stage fund in XIth plan • Despite India receiving over USD 2.2 billion in 2005, the going has not been easy for “seed stage” or pre-revenue companies as well as for those seeking less than USD 2 million in capital. The USD 79 million invested in early-stage firms in India went to 22 revenue generating (if not profitable) firms. • Nitin Desai Committee on Technology Innovation and Venture Capital analyzed problem of `low deal flow’

12. Fund for Accelerating Start-ups in Technology (FAST) in public-private-partnership mode • Primary focus: ICT • Ecosystem with DSIR,ISB ,TiE & IISc • Accelerating the creation of high technology start-ups • Under consideration for XIth plan

13. Risk minimization with networks • Promoter Risk • Product Risk • Technological Risk • Market Risk • Financial Risk • Implementation / Operational Risk • Organisational Risk • Strategy Risk • Environmental Risk

14. Conclusion • From supporting only public sector firms to supporting independent innovators and now planning to support start-up technology based firms at early stage of their growth, the government has traveled farther from low risk to high risk investments. • And the risk cannot be managed by relying only on government agencies - both the public & private stakeholders need to learn to play the game together.