New Scientist India special

India special: The next knowledge superpower

19 February 2005

THE first sign that something was up came about eight years back. Stories began to appear in the international media suggesting that India was "stealing" jobs from wealthy nations - not industrial jobs, like those that had migrated to south-east Asia, but the white-collar jobs of well-educated people. Today we know that the trickle of jobs turned into a flood. India is now the back office of many banks, a magnet for labour-intensive, often tedious programming, and the customer services voice of everything from British Airways to Microsoft.

In reality, the changes in India have been more profound than this suggests. Over the past five years alone, more than 100 IT and science-based firms have located R&D labs in India. These are not drudge jobs: high-tech companies are coming to India to find innovators whose ideas will take the world by storm. Their recruits are young graduates, straight from India's universities and elite technology institutes, or expats who are streaming back because they see India as the place to be - better than Europe and the US. The knowledge revolution has begun.

The impact of the IT industry on the economy has been enormous. In 1999 it contributed 1.3 per cent of India's GDP. Last year that figure had grown to 3 per cent. And what's good for one science-based industry should be good for others. India has a thriving pharmaceutical industry which is restructuring itself to take on the world. And biotech is taking off. The attitude is growing that science cannot be an exclusively intellectual pursuit, but must be relevant economically and socially. The hope among some senior scientists and officials is that India can short-cut the established path of industrial development and move straight to a knowledge economy.

For the New Scientist reporters who have been in India for this special report, many features of the country stand out. First, its scale and diversity. With a population of more than a billion, the country presents some curious contrasts. It has the world's 11th largest economy, yet it is home to more than a quarter of the world's poorest people. It is the sixth largest emitter of carbon dioxide, yet hundreds of millions of its people have no steady electricity supply. It has more than 250 universities which catered last year for more than 3.2 million science students, yet 39 per cent of adult Indians cannot read or write.

These contrasts take tangible form on the outskirts of cities from Chennai to Delhi, Mumbai to Bangalore. Here, often next to poor areas, great gleaming towers of glass are growing in which knowledge workers do their thinking. These images of modernity are a far cry from stereotypical India - a place bedevilled alternately by drought and flood, of poor farmers and slum-dwellers. Yet both sets of images are real - and many others besides.

High-tech is not the sole preserve of the rich. Fishermen have begun using mobile phones to price their catch before they make port, and autorickshaw drivers carry a phone so that customers can call for a ride. Technology companies are extending internet connections to the remotest locations. Small, renewable electricity generators are appearing in villages, and the government is using home-grown space technology to improve literacy skills and education in far-flung areas.

These efforts are often piecemeal, and progress is slow. "Illiteracy today is reducing only at the rate of 1.3 per cent per annum," says R. A. Mashelkar, director-general of the government's Council of Scientific and Industrial Research. "At this rate, India will need 20 years to attain a literacy rate of 95 per cent." He is hopeful that technology can speed up this process.

Science too has its role to play. Critics of India's investment priorities ask why the country spends large sums on moon rockets and giant telescopes while it is still struggling to find food and water for millions of its citizens? The answer is that without science, poverty will never be beaten. "You cannot be industrially and economically advanced unless you are technologically advanced, and you cannot be technologically advanced unless you are scientifically advanced," says C. N. R. Rao, the prime minister's science adviser.

Rise of the middle class

The knowledge revolution is already swelling the ranks of India's middle class - already estimated to number somewhere between 130 million and 286 million. And the gulf in spending power between the poor and the comfortably off has never been more apparent. Take cars. Sales are rising at more than 20 per cent a year. Before India opened up its economy in the early 1990s, only a few models were available, almost all home-built. Today, top-end imported cars have become real status symbols. Another consequence of the knowledge revolution is that the extreme wealth of a new breed of young, high-tech yuppies is challenging traditional gender roles and social values.

Whether the new-found prosperity and excitement of present-day India can be sustained will depend crucially on how the government guides the country over the next few years. Cheap labour and the widespread use of English do not guarantee success, and there are major obstacles that the country will need to tackle to ensure continued growth. Take infrastructure. Where China has pumped billions into water, road and rail projects, India has let them drift. Likewise, companies complain that bureaucracy and corruption make doing business far more difficult than it ought to be.

One of the critical issues facing India is the gulf between the academic world and industry. The notion that scientific ideas lead to technology and from there to wealth is not widespread. This stems in large measure from the attitudes prevalent before 1991. Before economic liberalisation, competition between Indian companies was tame, so they were under no pressure to come up with new ideas, nor did academics promote their ideas to industry.

India's attitude to patents are a product of that mindset. The country has no tradition of patenting, and only recently have institutions and academics started spinning off companies and filing for patents in earnest. Most applications filed in India still come from foreign companies. Until this year, the country did not recognise international patent rules, a failure that hampered interactions with foreign companies.

The suspicion remains that Indian companies are out to steal ideas, says Gita Sharma, chief scientific officer of Magene Life Sciences, a start-up company in Hyderabad. "We are not yet able to wipe away that image." And while India has now adopted those international rules on paper, there are still concerns about how strictly they will be enforced. "It will take a couple of years before the full implications play out," says Sankar Krishnan, a biotechnology analyst for McKinsey and Company in Mumbai.

Bringing research round to a more commercial way of thinking is not the only issue that academia must face up to. Another cultural problem, according to some scientists, is that too often institutions have an ethos of playing safe. Researchers who devise and test daring theories are criticised if they fail, discouraging the kind of ground-breaking research that India needs.

There is a widespread view that the entire university system needs an overhaul. India awards only 5000 science PhDs a year, says Mashelkar, yet it should be producing 25,000. There are funding problems and political interference in the running of some universities, particularly those run by state governments. In response, central government has decided to select 30 universities, give them extra money, and mentor and monitor them to create a series of elite institutions.

But such changes will be for nothing if students choose not to study science. In recent years, increasing numbers have chosen to study IT and management because that's where money is to be made. "IT and outsourcing has improved the economy and quality of life of people, but has had a negative effect on science," Rao says. Mashelkar hopes that as science-based companies grow, and demand for fresh blood increases, salaries will rise and more students will opt for science.

Chasing China

These problems must be solved if India is to capitalise on its recent gains, and there are hopeful signs that Indian science is improving in the global scheme of things. Its share of the top, highly cited publications has increased, but it is starting from a very low base. The government spends only $6 billion a year on research and it still has fewer scientists per head of population than China or South Korea.

India's greatest rival has always been its giant neighbour to the north. While IT and services are helping India log 6 per cent year-on-year increases in GDP, China's vast manufacturing base is raising its GDP by around 9 per cent a year. Even in India's strong suit of knowledge-based industries, China could still steal the march on it, not least because its Communist government can command change, while in India the democratic government can only guide national development.

Nevertheless, the rewards for India of a thriving science-based economy could be huge. The investment bank Goldman Sachs estimates that if India gets everything right it will have the third largest economy in the world by 2050, after China and the US. India is not yet a knowledge superpower. But it stands on the threshold.