I don’t think I agree with your assessment. You are looking at only today, where as to go to the root of the issue you have to look at the historical background.

US did not come into existence as a developed nation, infact when the nation came into existence, India was ways ahead. Americans innovated because they had a need to do so. How do you connect with people living thousands of miles away? Telegram and then comes the telephone, and they innovate because they do not expect the Government to solve or provide solutions to their problems and whatever chances India had of catching up were destroyed by the evil Socialist government we had up until late 90’s.

I think India’s biggest drwaback is that we never grew out of the fuedal mindset. We always are looking towards our government to solve our problems, sure we are a democracy and elect our leaders, but we treat them more like royalty than one amongst us. Even today we do not see solutions for problems coming from Private Sector, the do have the capital to do so today so the capital argument is not valid.Look at our education system, it is designed to stymie any creative thinking that a child may have…from where will you find the innovators? I have serious reservations about the generations who are graduating from our schools today and the future ones to come, unless we do something about it fast, we are doomed.I think the problem is deeply cultural and I do not see any disruptive innovation coming out of India for a long long time.

Vishal

I think the above statement may not be fully applicable as this 300 million are different. You cannot simply copy innovations from some other market.
Also innovation need not be tied to ipod and iphones of the world.
Meeting a need of the market in a cost effective way is innovation.
It can be in any field!

Vishal

Why not much innovation happens in Metros and Cities is intriguing. Poor ecosystem and low apetite for Risk are some of the reasons.

Where did you get this statistics from:
“There are an estimated 800 million Indians whose income is less than $2 per day, and an estimated 500 million with incomes is less than $1 per day.”
I feel these income levels are very low and actual numbers could be two to three times this figure. If you consider in Purchasing power parity terms, it would be 10 to 20 times more.

@Vishu: Definitely there is the market for 300 million people and in fact that is what Atanu said – “it only needs execution of known innovations”.

I believe innovation’s basic pre-requisite is ‘demand/needs’ – of any sort. However, if the majority of junta in our country is mired in daily struggle then what sort of new ‘innovative’ product do they demand/need. I mean how does it matter if you listen you fav. song via iPod or your 10 year old Sony walkman. How many do really care about the quality etc?

So essentially, the basic perception of ‘need’ is very different in two countries. I am sure if iPod would have been innovated in India – it would have been killed in its infancy. The problem is not with the innovation lacking people – its the link of innovation to the ‘needs’ affecting the majority. The innovation which maintains this link are definite winners. For example, look at Micro-finance concept (recent financial innovation) – Regionally the highest concentration of these accounts was in India (188 million accounts representing 18% of the total national population).

Alright, there are VCs. Especially, ones who’ve earned a sizable amount in a foreign country and are looking for investing in India. But, you won’t find many of them. Maybe the attitude of the people will change if the policies of the government will change; them relaxing rules, or making it easier for people to start their own ventures. Government can play a huge role, positively. I’d like to quote from an article: Made in Taiwan I read in the Forbes,

“How did Taiwan emerge as an electronics workshop to the world? The island has an abundance of relatively low-cost engineers, many of them returnees from the U.S., and strong connections to Silicon Valley. The Taiwan government stimulated the high-tech industry with tax and venture capital incentives. The country has a deeper technical and industrial base than its Southeast Asian neighbors. Taiwan’s entrepreneurs have been much more adaptable than its competitors in Japan and Korea to the rapid change and short product cycles in the computer industry.”

So, what does a ‘budding’ entrepreneur do to make the planets work for him?

Vishal

The penetration of Mobile is a kind of innovation for India. Nobody though that Mobiles would become so common.Indian IT is an innovation.
Is it comparable to way US Innovates. No way.
Will it ever become like US. Time will tell and the way it looks now
even if it is tough going now we will have more innovation and entrepreneurship. It will all depend on luck, as do may things happen in India.

Vishal

Lack of innovation in india (which is not true by the way, will come to that) is not a result of subsistence existence.

Lack of innovation and subsistence existence are BOTH the results of socialism and nehruvian stalinism that india followed. And continues to follow.

Under socialism, the individual — and everything he owns — property, ideas, everything — is stolen by the state, ostensibly for “the general good”.

As a result, no one has any incentives to innovate — because there is no reward for taking that risk.

Despite this, innovation thrives in india — especially in niches and areas where the octopus like tentacles of the state do not reach.

This includes in developing breakthrough economic models (think nano, and so many others), in identifying breakthrough areas to make money (e.g. at traffic lights, what not) or even in identifying breakthrough ways to make money while keeping the incubus like government of your back. Think Amul.

Where the state does reach, and enforces its “government knows best” policy, innovation is extinguished, to be replaced by subsistence. Think agriculture. india can be the food basket of the world, but it is not to be.

In sum, unless india discards socialism, it will not move beyond subsistence to innovation.