Post-independence Efforts to Create ST Capabilities Role of Industrial Policy
Prosiding Forum Tahunan Pengembangan Iptekin Nasional 2012 2
MANAGEMENT OF FRUGAL INNOVATION: LESSONS FROM INDIAN EXPERIENCES
Rishikesha T. Krishnan
Professor of Corporate Strategy Policy, Indian Institute of Management Bangalore, India
Email: rishiiimb.ernet.in
In recent years, India has gained a reputation as a hub of frugal innovation Bound Thornton, 2012. India offers some of the lowest priced mobile phone services in the world,
yet, until recently, Indian mobile services companies made healthy profits. Carlos Ghosn, CEO of RenaultNissan coined the term “frugal engineering” after he found that an
engineering team in India was able to develop an engineering solution for a problem at one- fifth the cost at which a French team was able to do it Radjou, Prabhu and Ahuja, 2012.
But, perhaps the defining moment for frugal innovation in India was the announcement of the launch of the Tata Nano, a car with a price tag of Rs. 100,000 at that time, approximately
USD 2,200 in January 2008. This phenomenon raises several important questions that are relevant to India and other
emerging economies. 1 How significant is frugal innovation in the overall innovation paradigm in India? 2 What are the factors supporting frugal innovation in India? 3 Are
there any lessons we can learn from the Indian experience as to how frugal innovation can be managed effectively? 4 In particular, are there any lessons we can learn from India as to
how an innovation system can be shaped to support frugal innovation? These questions are the subject of investigation of this paper.
To answer these questions, we need to place the recent attention to frugal innovation in the broader context of the evolution of innovation in India. We therefore start with a brief
history of innovation in India. 1. INNOVATION IN INDIA: A HISTORICAL PERSPECTIVE
1.1.
Strong Heritage but Missed the Industrial Revolution
As an ancient civilization with a rich intellectual and cultural heritage, India was known for seminal contributions to the development of algebra, geometry, and mechanics. This rich
heritage was built upon over the centuries with India being a major contributor to the global economy. Some estimates suggest that India accounted for as much as 24 of the world’s
GDP in 1700 Maddison, 2007. However, after the entry of the British East India Company into India in the 17
th
century, and the subsequent formal annexation of India as a part of the British Empire in the early 19
th
century, India was effectively under colonial rule for a few hundred years till its independence in 1947. India became a part of the traditional colonial economic model
– a supplier of raw materials and other resources, and a recipient of finished goods from the British. As a result,
India largely missed out on the industrial revolution and instead became a supplier of inputs to the British industrial machine. The country became increasingly impoverished and its
share of world GDP declined to 4 by 1950 Maddison, 2007. At independence in 1947, India was one of the poorest countries in the world.
In addition to missing out on the industrial revolution, India also missed out on the major strides taken in science and technology in the late 19
th
and early 20
th
centuries, a very fertile period for global science and technology Krishnan, 2010. There were very few scientific or
research institutions in India at the time of independence, and the university system was also restricted to a few pockets.