After PLI, now ILI scheme on the cards
Govt is likely to offer fiscal and non-fiscal mechanisms to help firms improve their risk appetite to pursue innovation
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- SSI refers to set of institutions, organizations and actors within a specific sector
- NMIS recommended an efficient SSI policy
- It suggested States to play key role in delivery of MSME-oriented policy and incentive schemes
New Delhi: In a bid to boost the manufacturing sector, the central government may now focus on fiscal and non-fiscal steps as well as sector-specific systemic technological innovation, which is integrated with industry.
The government may consider fiscal and non-fiscal mechanisms to help firms improve their risk appetite in pursuit of innovation. An innovation-linked incentive scheme (ILI) could be launched to help firms, especially MSMEs, to address the financial risks linked to innovation uncertainty. The central government is already implementing production linked incentive (PLI) scheme to boost manufacturing activity across India.
The Ministry of Science and Technology is keen on sectorial systems of innovation (SSIs). A SSI refers to the set of institutions, organizations, and actors within a specific sector that facilitate innovation and the transfer of knowledge. This includes universities, research institutions, government agencies, and private companies.
The National Manufacturing Innovation Survey (NMIS), carried by the Ministry of Science and Technology and the United Nations Industrial Development Organization, has recommended an efficient SSI as a policy objective and investment in the development and promotion of sector-specific innovation activities, official sources told Bizz Buzz.
This, the sources added, will facilitate and promote the establishment of databases and collaboration platforms, which will also offer capacity building for firms, knowledge-based institutions (KBIs), and arbitrageurs. The arbitrageurs include banks, financial institutions, venture capitalists, and angel investors.
The NMIS even favors collaboration among competitors. “While such collaboration between industry competitors can appear counterintuitive and therefore resisted, lessons from innovative nations show a strong government arm can facilitate and even mandate such collaboration,” the survey said.
Such interventions can be dedicated to the central government’s R&D programmes for large-scale and long-term funding allocation for precompetitive industry-focused research and innovations, where collaboration can be mandated as a qualifying criterion for accessing any research grant, it added.
The government may consider launching funding allocation for pre-competitive, collaborative industry-focused research and innovation, drawing inspiration from the success of similar programmes in countries as diverse as Australia, UK, Germany, the Netherlands, Israel, Japan and the Republic of Korea, the NMIS said.
State governments are better connected with MSMEs and are a vital link in the delivery of MSME-oriented policy and incentive schemes. This is true for innovation as well, the survey said. States can use the data generated through the NMIS survey and the results of the Indian Manufacturing Innovation Index 2022. Together, they provide valuable and specific areas where their targeted response can make a difference, the survey said.
