The Triple Threat: Why Indian Industries Struggle to Innovate, Transform, and Go Global
For decades, India has been celebrated as an emerging economic powerhouse with immense potential fueled by a transformative young population. Yet, despite this promise, a significant portion of Indian industries remains trapped in a cycle of underperformance, hindered by a critical trifecta of challenges: a lack of innovation, an aversion to fundamental transformation, and an inability to truly globalize. This stagnation not only limits their growth but also holds back India’s ambition to become a world-leading economy.
The Fetters of the Familiar: A Reliance on Low-Cost Labor and Lack of Innovation
A primary reason for the lack of innovation in Indian industry is an over-reliance on cheap labor and a meager investment in research and development (R&D). Indian companies spend a paltry amount on innovation, often content with replicating existing products and services rather than creating new ones. This approach has led to a dearth of groundbreaking innovations, with most Indian companies focusing on low-margin, low-risk products that lack global appeal. The textile and garment industry, a cornerstone of India’s manufacturing sector, is a prime example. While countries like Bangladesh and Vietnam have aggressively modernized their production systems, investing in smart textiles and automation, a significant portion of the Indian industry still operates on a traditional, labor-intensive model.
The Inertia of Legacy: A Reluctance to Transform
Beyond a lack of innovation, Indian industries often display a profound reluctance to undergo deep, structural transformation. Many companies are built on legacy business models and are hesitant to disrupt their own operations, even when faced with new market realities and disruptive technologies. Even when some companies do innovate, they often fail to transform according to global standards, sticking to outdated practices and failing to integrate into global value chains. This is particularly evident in India’s Small and Medium Enterprises (SMEs), which form the backbone of the economy.
The Domestic Comfort Zone: Failing to Go Global
Indian companies’ inability to expand globally is a direct result of their internal focus on outdated practices and low-cost models. Globalization is not just about exporting goods; it’s about building global brands, establishing international supply chains, and competing on quality, innovation, and intellectual property. Indian firms struggle to make this leap due to limited spending on R&D, a lack of focus on creating original global products, and an inability to adapt to global standards.
A striking example of this failure is the contrast between Indian companies and global giants like McDonald’s and Domino’s. These companies, despite selling seemingly simple products like burgers and pizzas, have managed to build global empires with thousands of outlets across continents. Their success is a result of meticulous standardization, global supply chains, and a brand-building strategy that transcends cultural boundaries. In contrast, Indian companies, even those with a strong domestic presence, struggle to replicate this global franchising model and lack the understanding of how to build a scalable, standardized, and globally appealing brand from scratch. This inability to take even a simple consumer product global highlights a deeper strategic failing: a lack of knowledge and willingness to undertake the transformation required for international expansion.
The Size Paradox: Why Indian Companies Remain Small
The inability of Indian companies to innovate, transform, and globalize has resulted in them remaining relatively small compared to global giants. Even India’s largest companies, with significant domestic market capitalization, are often not even the size of mid-sized companies in the global landscape. This size disparity is a direct result of the lack of innovation, failure to transform, and inability to globalize.
The Path to a Developed India: Embracing ITG
As India aims to become a Developed Nation by 2047 and lead the world, it is imperative to adopt the principles of Innovation, Transformation, and Globalization (ITG). Without embracing ITG, India will struggle to achieve its ambitious goals. By prioritizing innovation, transforming business models, and globalizing Indian companies, we can create a robust economy that is capable of competing on the world stage. ITG is not just a strategy, but a necessity for India’s growth and development.
The Way Forward: A Call for a Mindset Shift
To break free from this triple threat, Indian industry needs a fundamental shift in mindset. This requires a collaborative effort involving businesses, policymakers, and academia. Key strategies include:
– Investing in Innovation: Indian companies must prioritize R&D and invest in creating new products and services that can compete globally.
– Fostering a Culture of Transformation: Indian firms, especially SMEs, need to be incentivized and supported to adopt new technologies and formalize their operations, enabling them to integrate into global value chains.
– Thinking Global from Day One: Companies must design products and services for a global market, with a focus on quality, precision, and intellectual property. The government can play a crucial role by strengthening industry-academia collaboration and providing more risk-tolerant funding for deep-tech ventures.
By adopting these strategies and embracing the principles of ITG, Indian industry can overcome the challenges
Vineet handa
Chairman Swadeshi Shodh Sansthan ( Punjab )
