Rishikesha T. Krishnan
Indian Institute of Management Bangalore
The evolution of the Indian Innovation System is best understood in two phases—the first from Indian independence in 1947 till about 1990 (the "self-reliance" phase); and the second from 1991 to the present (the deregulation phase).
Before economic deregulation began in the early 1990s, India's dominant economic philosophy was one of self-reliance. The objective was to produce the country's requirements, to the extent possible, within the borders of the country. An elaborate process of economic planning created 5-year blueprints for the allocation of resources and the creation of capacities in the country.
The public sector was seen to be the fountainhead of industrial development and accounted for as much as two-thirds of the fixed capital investment in the factory sector. Public ownership was particularly stressed in those sectors where technology acquisition was expected to involve the evaluation of a range of non-commercial considerations (Tyabji, 2000).
Though India had a mixed economy (i.e., private Indian firms as well as multinational companies) there were tight regulations on inward capital flows, expansion, diversification and the import of capital goods, intermediates, and technology. Technology imports were regulated on a case-by-case basis, and companies permitted to import technology were often required to commit to progressive indigenization ...