Commercialization of New Technologies in India: An Empirical Study of Perceptions of Technology Institutions
Commercialization of New Technologies in India: An Empirical Study of Perceptions of Technology Institutions
Commercialization of New Technologies in India: An Empirical Study of Perceptions of Technology Institutions
Abstract
In recent years technology has become not only an important dimension of national development and growth but also essential
for survival in this competitive world. Consequently, development and commercialization of new technologies has become an
activity of focal attention and a force to reckon with.
India had started development of its scientific infrastructure in a planned way immediately after independence, however, tech-
nology development/commercialization attracted due attention of policy makers only since 1980s. The papers presents findings of
field research undertaken by the authors to study the status of new technology commercialization practices in the country. The
focus is on the parameters that influence the decision regarding commercialization of new technologies and the success of new
technology ventures, the efficacy of existing financing/support mechanisms and the further actions required by stakeholder agencies,
viz., industry, technology institutions, financial institutions and the government for further development of commercialization of
new technologies in India. For better exposition the presentation is divided into sections dealing with introduction, technology
commercialization policy initiatives in India, need for the study, design and methodology, study findings and is summed up
with concluding remarks.
Keywords: Technology; Technology transfer; Technology commercialization; New technologies; Innovation; Development through innovation;
Research and development; Technology institutions; Technology stake holders; Technology research
independence. A chain of about 3000 scientific insti- commercialization of new technologies; (iii) study and
tutions of which 2000 are devoted to research and devel- identify the vital parameters (thrust areas) that can
opment (including about 1400 in-house research and improve the ability and effectiveness of financing mech-
development units of industrial sector, academic insti- anisms for commercialization of new technologies; (iv)
tutions, testing laboratories and technology centres) were study and identify the challenges, inter-se, recommen-
created (Research and Development Statistics, 1998). dations to enhance the effectiveness of facilitation/policy
Establishment of venture capital funds was started measures towards building a culture of "commercializ-
during the mid 1980s and Technology Policy Statement ation of new technologies" in India.
(1983), Research and Development Cess Act (1986) and This paper presents the perceptions of technology
Technology Development Board Act (1995) were institutions with respect to commercialization of new
enacted by the Government with an objective to provide technologies in India, based on field research study
risk-sharing funds as well as the managerial expertise (sample size: 175 numbers) and aggregate analysis of
for technology development and commercialization. their past experiences of transfer of 369 new techno-
In addition, as follow-up actions of the Technology logies to industry during the period of study (1985
Policy Statement (1983), a few special 1999).
mechanisms/schemes were initiated during late 1980s
and early 1990s to facilitate and promote technology
proving, up-scaling and commercialization. The major 5. Design and methodology
ones are: "Programme aimed at technological self
reliance" (PATSER), a scheme of Department of Scien- The sample size of 175 units of technology institutions
tific and Industrial Research (DSIR); "The sponsored was taken by stratified random sampling from the pur-
research and developments" (SPREAD) and "Pro- posive universe of about 1500 technology institutions
gramme for acceleration of commercial energy research consisting of in-house research and development labora-
(PACER)" schemes of Industrial Credit and Investment tories of industrial firms, national/state government/
Corporation of India Limited (ICICI) and Home Grown academia research laboratories and private research
Technology (HGT) of Technology Information, Fore- institutions/bodies. The study has been limited to two
casting and Assessment Council (TIFAC) an auton- broad sectors of Indian industry, namely: (i) metal, met-
omous body of the Department of Science and Tech- allurgy and mechanical engineering related and (ii)
nology (DST). chemical and pharmaceutical related. The first sector has
a lower rate of technology obsolescence and the second
sector a higher one. This being the first study on the
3. Need for the study
topic in Indian context, the sectors with extreme rates of
In spite of the above mentioned initiatives, the desired obsolescence have not taken; these can be taken up in
impact has not been made by new technologies, albeit, future studies. The selection of the sample is not without
a beginning has been made in a modest way. There are reasons. It is partly to keep the study within manageable
some weighty reasons for such a state of affairs. Many limits. Nevertheless the selection of the sample from the
of the technologies developed in Indian laboratories have technology institutions engaged in commercialization of
remained unexploited as they have not been proven on new technologies and having national/state approved
adequate prototype or pilot plant scale (Sikka, 1997). status and spread through out the country, cutting across
the scales of operation (small/medium/big), can be said
to be fairly representative for the study.
4. The study
The data were collected directly from the sample tech-
The authors undertook a field research to study the nology institutions through the questionnaire sent by
current status and practices of commercialization of new mail and followed personally. This exercise has resulted
technologies in India with perspective of four major in total 117 responses out of which 99 have provided
stakeholder groups, viz., industrial firms (sample size: most of the data. The respondent technology institutions
200 numbers), financial institutions (sample size: 55 have a fairly good spread (Appendix A) with respect to
numbers), technology institutions (sample size: 175 their type, location, marketing channel, age, number of
numbers) and policy-makers and facilitators (sample technologies transferred for commercialization, success
size: 50 numbers). rate and degree of success, etc. In addition, information
The study made a modest attempt in its holistic nature has also been collected about the practices followed dur-
to: (i) study and analyse the practices of commercializ- ing the transfer of 369 technologies by the respondent
ation of new technologies in India, in terms of important technology institutions during the period of study (1985
parameters that influence the decision of commercializ- 1996) and the performance level of these transferred
ation of a new technology; (ii) identify the thrust para- technologies. The data collected has been organized and
meters, inter-alia, their relative importance for successful collated by using standard and well-accepted statistical
V. Kumar, P.K. Jain / Technovation 23 (2003) 113-120 115
techniques and norms. The data processing and analysis ario in the country. It can be expected that with time the
have been done by using a standard software package awareness of patents and their usefulness would
termed the "Statistical Package of Social Science" (SPSS). improve.
Frequency distribution, weighted average scores, corre-
lation analysis and regression analysis, etc. have been 6.2. Parameters important for the success ofNTCV
extensively used for analysis of data (Edwards, 1957;
Simon, 1968). The weighted score and the rank order (Table 2)
reveal that 'timely availability of required funds'
(weighted score 359), 'no-repayment during gestation
6. Study finding period' (weighted score 347) and 'nil or low interest rate
during gestation period' (weighted score 338) are the
6.1. Decision to commercialize new technologies most important three parameters for the success of a
NTCV. These primarily relate to the financial dimension,
The most important three parameters for the decision especially pertaining to the availability and cost of capi-
to commercialize a new technology are: 'status of tech- tal.
nology' (score 1153), 'source of technology' (score These parameters directly reflect on the financial bur-
1087) and 'market potential for end product' (score den during pre-operation and gestation period of
1013). Table 1, lists the important fourteen parameters NTCVs. The parameters at next two ranks of importance
in the order of importance based on the weighted score pertain to readiness of technology. Three parameters
obtained by each of them. The three factors considered rated the least important are: 'aesthetics of product and
the least important are 'capacity of company to expand
in future' (rank 12, score 402), 'geographical location of
company' (rank 13, score 395) and 'size of industrial Table 2
firm' (rank 14, score 360). Parameters that contribute to the success of the NTCVs (note:
maximum weighted score that a parameter can achieve is 396)
The most notable finding of the survey is that contrary
to the importance given by WTO and others to the Parameter Weighted score Rank
patentability of technology, the technology institutions
have placed it at the seventh rank of importance. It Timely availability of
359
required funds
appears reasonable considering the overall patent scen- No re-payment during
347
gestation period
Table 1 Nil or low interest rate
338
Factors Important for decision to commercialize a new technology during gestation period
(note: the maximum weighted score a parameter can secure is 1386) Optimisation of
332
technology at pilot plant
Factor Weighted score Rank In-advance completion of
plant engineering and
327
Status of technology 1153 1 design including
Source of technology 1087 2 instrumentation
Market potential for end Commitment and sincerity
1013 3 326
product of entrepreneur/company
Company's business Support from technology
921 4 316 7
philosophy supplier
Financial status of the Concurrent engineering 314 8
industrial firm (ability to Product engineering to
847 301 9
bring in its share and over market needs
run, if any) Efficient erection and
298 10
Tie-up for technical commissioning
backup support 779 6 Use of easily available
Patentability of technology
285 11
648 7 inputs
Entrepreneurial experience Training of technical and
of the proposer 639 8 277 12
market staff
Educational background of Pricing, product
entrepreneur 504 9
positioning and product 275 13
Import-export policy 469 10 launch
Fiscal policies 427 11 Aesthetics of product and
Capacity of company to 273 14
packaging
expand in future 402 12
Low interest rate during
Geographical location of 266 15
re-payment period
company 395 13
Longer re-payment
Size of the industrial firm 261 16
360 14 periods
116 V. Kumar, P.K. Jain / Technovation 23 (2003) 113-120
packaging' (score 273), 'low interest rate during re-pay- ered this part of the questionnaire; a few have ticked
ment period' (score 266) and 'longer re-payment per- some of the items. This aspect was discussed during the
iods' (score 261). personal visit to select technology institutions. It
emerged that scientist/technologists working at tech-
6.3. Appraisal of funding mechanisms nology institutions are generally not conversant with
these terms. The setting up of monitoring or review com-
Only 11 (11 %) of technology institutions feel that mittees to overlook the progress of the project is accept-
sufficient mechanisms exist in the country to finance able to the majority (91%) of technology institutions
NTCVs and just 6 (6 %) said that desired impact is being while placement of member on the board is acceptable
made by these mechanisms. The majority of respondents only to 88% of respondents.
(98%) are of the opinion that much more is required to
be done. 6.4. Appraisal of facilitating measures
Improvements desired for various features of the
existing mechanisms are presented in Appendix B. The The majority of technology institutions (98%) are of
highlights are: the opinion that each of the stakeholder agencies need
to facilitate further the development and promotion of
(i) The number of special financing schemes for 'commercialization of new technologies' in the country.
NTCVs be increased from existing about 10 Specific action points that have emerged for industrial
schemes to 15 to 20 schemes (96% respondents), firms, research and development institutions, financial
the number of proposals to be institutions and the Government are summarized below:
considered/year/scheme be increased from around
250 to about more than 500 numbers (85%
6.4.1. Actions to be taken by Industrial Firms
respondents) and the number of proposals
(weighted score)
approved/year/scheme be increased from about 10
In order of importance
to around 30 to 50 numbers (67% respondents).
(ii) Regarding the upper limit of financial support in
terms of monetary value, the majority of respondent (1) To have a longer perspective of research and devel-
technology institutions (62%) have suggested it to opment activities as an investment for the future
be Rs. 500 million as against current practice of (368).
about Rs. 50 million. In terms of percentage of pro- (2) For nearly developed technologies to work with lab-
ject cost, the majority (74%) have suggested that oratories to set up demonstration/pilot plants (307).
the upper limit be increased from about 50-75%. (3) To promote sponsored research with Indian labora-
tories (281).
(iii) The majority (76%) of respondents have suggested
(4) To have research and development laboratories as
that the rate of interest during the gestation period
corporate members in the company (225).
be 2-6% per annum as against the current rate going
up to 16%. Charging of royalty @ < 2 % of sales as (5) To take corporate membership in research and
against current practice of royalty charges of up to development laboratories (211).
5% of sales is recommended by 63% of the respon-
dents. Further, the period over which royalty is to
be paid is recommended as 7 years by the majority 6.4.2. Actions to be taken by Technology Institutions
of respondents (63%) as against the current practice (weighted score)
of royalty charges up to 10 years. In order of importance
(iv) The processing time of proposals be reduced from
6 to 12 months to 3 to 6 months (86% respondents) (1) To concentrate on emerging and innovative areas
and release of the first instalment be done within (674).
2-3 weeks of project approval as against 6-15 (2) To undertake more projects of industrial importance
weeks being taken currently (80% respondents). with market oriented approach (613).
(v) Most of the respondents (61%) have desired that (3) To have collaborative projects among laboratories,
application processing charges should be Rs. 10,000 industrial firms and academic institutions (548).
per application and the balance 39% have suggested (4) Do not stop at laboratory scale, take it up to demon-
it to be kept at about Rs. 5000/- which can easily stration plant level with industry participation (519).
be afforded by most of the applicants. (5) To do proper documentation of technology, design
and techno-economics of commercial plant (471).
As far as the desirability of mode of surety (say, bank (6) To work in industry for technology transfer cases,
guarantee, hypothecation or mortgage and personal till they are established (405).
guarantee, the majority of respondents have not answ- (7) To be a corporate member in companies (355).
V. Kumar, P.K. Jain / Technovation 23 (2003) 113-120 117
(8) To be a corporate sponsored agency (to have corpor- (i) The level of rigour practised to asses the technology
ate membership from industry) (309). risk and market risk have positive correlation as
well as association of highest degree with the suc-
cess of NTCV.
6.4.3. Actions to be taken by Financial Institutions (ii) Readiness of technology in terms of demonstration
(weighted score) at pilot plant scale, working out of plant and equip-
In order of importance ment specifications/details, firming up of oper-
ational parameters, product/technology orientation
(1) To share the risk with entrepreneurs (492). to market needs and availability of low cost and risk
(2) To provide required funds in time (457). sharing funds are the next important parameters that
govern the success of NTCVs.
(3) To charge no interest during the gestation period
(391). (iii) The level of rigour practised to assess financial risk
(4) To have no re-payment during the gestation period has not shown any correlation or association with
(269). the success of NTCV. This is understandable, as the
(5) To have lower re-payments in the initial stages of practice of assessing financial risk is not yet
commercialization (171). developed/practised in India. It may take some more
(6) To have 5-8 years repayment period after the ges- time to develop to appropriate level.
tation period (120). (iv) 'Age of technology institution' and 'number of new
technologies transferred for commercialization'
have exhibited strong negative correlation with the
success parameters. The negative values of coef-
6.4.4. Actions to be taken by Government (weighted ficient of correlation indicate that as the technology
score) institutions grow old or the number of technologies
In order of importance transferred for commercialization increase, they
(technology institutions) possibly get busy in a
(1) To declare commercialization of new technologies number of activities resulting in lower attention to
as a priority activity and to make available all each project and thus, lower success rates. On the
facilitations/incentives including soft loans that are other hand the number of technologies transferred
available to priority sectors (479). successfully has positive correlation with the suc-
(2) To provide incentives to research and development cess parameters of NTCV
institutions and industrial firms to commercialize (v) The success parameters have positive correlation
new technologies (423). with 'type of technology institution', inter-se, as
(3) To provide sales tax, excise duty and local taxes technology source shifts from private research and
exemption for new technology products and plant development laboratory to in-house research and
and machinery used for it (including customs duty development laboratory the chances of success
if applicable) for 5 years from the date of start of increase significantly. It may be so because risk
production (391). evaluation exercises are performed to higher levels
(4) Government domain agencies to quickly patronize of rigour in the case of in-house technologies than
the products/services of new technologies, even at in the case of technologies coming in from outside.
slightly higher cost during initial years (327).
(5) To open up government laboratories for industrial
corporate members (234).
(6) To allow government laboratories to become corpor- 7. Conclusion
ate members of industrial firms (148).
The study has brought to the fore the important para-
meters that influence the decision of commercialization
6.5. Aggregate analysis of part experience of new technologies, their success as well as the signifi-
cant features of the developmental phase of commer-
Performance and experience of transfer of 369 new cialization of new technologies in India. These can be
technologies by the respondent technology institutions of beneficial use for practising agencies. In addition, the
during 1985 to 1996 has been analysed. Correlation findings bring out clearly the areas/aspects that need to
analysis as well as stepwise multiple regression have be developed further with focussed thrust. Further, it
been used to identify the parameters that have significant provides a well researched and in depth studied material
association with the rate and/or degree of success and for researchers and scholars working in the area of com-
their relative hierarchical importance. mercialization of new technologies in particular and
The salient findings are: technology management in general.
118 V. Kumar, P.K. Jain / Technovation 23 (2003) 113-120
North South East West Total 1-3 4-6 7-10 More Total
than 10
Sector 1 16 8 6 5 35
Sector 2 31 21 5 7 64 Sector 1 4 9 11 11 35
Total 47 29 11 12 99 Sector 2 8 24 14 18 64
Total 12 33 25 29 99
Table A2
Respondent spread: sectorwisetechnology institution typewise Table A6
Respondent spread: sectorwise based on success rate of commer-
Sector Type of technology institution cialization of new technologies
Table A3 Table A7
Respondent spread: sectorwisemarketing channelwise Respondent spread: sectorwise spread on degree of success
expected 1.0= as expected 1.2=better than expected Appendix B. Technology institutions' response to
and 1.5= much better than expected). A technology the features of special mechanisms to finance
commercialization project with the value of 'degree NTCV
of success' equal to or more than1.0 has been taken
as a successful venture. Table B1
Table B1