Models of STI Driven Manufacturing Dr. Nirmalya Bagchi Professor Administrative Staff College of india [email protected].

Models of STI Driven Manufacturing

Dr. Nirmalya BagchiProfessor

Administrative Staff College of [email protected]

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• 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 IntensityHigh Labour IntensityEg. Garments

High Technology IntensityHigh Labour Intensity

Eg. ICT

Low Technology IntensityLow Labour IntensityEg. Weaving

High Technology IntensityLow Labour Intensity

Eg. Robotics driven manufacturing

HOW OTHER COUNTRIES HAVE ACHIEVED MANUFACTURING LED GROWTH

SME based traditional manufacturing: Germany

• Mittelstadt– 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 entry1. Market Failure Conditions

2. Government as a Catalyst

3. Share Risk (Lowered Risk)

4. Predetermined Exit Conditions

5. No Government Control

6. Indirect Investments (Funds)

7. 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

• Supports competitive R&D of mature companies (SME’s as well as big companies)

• Target: establish and develop substantial industrial R&D infrastructure

• Grants between 30-50% of R&D plan, royalties payments - obligatory upon success

• Acquisition and transfer of knowledge due to special approvals• 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.

• 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 bio-

technology 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.

12

OCS Government Support Programs

Generic R&D

MAGNET

MAGNETON

Competitive R&D

IndustrialR&D

Nati

o na l

Pre-Seed

TNUFA

NOFAR

TechnologicalIncubators

Cooperative R&D

Long-Range R&D

Applied Academic Research

Basic R&D Market Proximity

EUREKA

Bi-national Funds

ISERD(Europe FP)

Inte

rnati

onal

Global Enterprises R&D Collaboration Framework

Bi-national Agreements

Galileo

KAMIN

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 • 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

• 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.• Need an entity with new rules and practices• Need new practices and rules of audit

– Culture of Innovation and Entrepreneurship in• 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

Basic Research Applied Research Tech Development Manufacturing

Govt. Support HEGovt. Support HEPPP’s PPP’s

“Early Stage”“Intermediate VC” “Classic VC & PE”

IP v

alue

Stages and Time

Govt. Support S&TGovt. Support S&T

Govt. Support New Entity Commercial?Govt. Support New Entity Commercial?

Thank You