By Kiran Mazumdar Shaw

It is a harsh reminder of the interconnectedness of the global economy that a microscopic yet lethal virus can bring it to its knees. The IMF has declared a global recession. The global manufacturing sector has suffered its worst contraction since the 2009 recession. Stock markets worldwide are in the red. Central bank governors are scrambling to find policy antidotes. The world is bracing for a wave of bankruptcies and layoffs that can widen social and economic divisions, with consequences for years to come.

Once the medical crisis begins to recede, governments will be looking for ways to shore up their countries’ economies. The approaches they take to stimulate economic growth will have long-lasting effects, so the choice has to be made carefully.

As countries look to give their economies a much-needed stimulus in the aftermath of the COVID-19 outbreak, there is a huge opportunity for India to transform itself into a thriving economy.

We need to resurrect ourselves through economic policies that leverage our prowess in Science & Technology, build self-reliance through import substitution and rapidly expand exports.

Besides protecting against global supply chain disruptions, a sharper focus on large-scale import substitution will help add millions of jobs in the micro, small & medium enterprises (MSME) sector. This will require significant reforms and policy interventions for ensuring timely access to credit, improving ease of doing business and introducing new technology.

The expansion of local manufacturing scale should not just aim at catering to the domestic market. Companies need to be able to tap global markets, for which India needs a strong policy that provides incentives for exports.

In a recent interview, economist and former NITI Aayog vice-chairman Arvind Panagariya has argued for raising India’s share in global exports to at least 4-5%. Even if the global merchandise export pie shrinks to US$15 trillion post the COVID-19 crisis, a 5% share will mean US$750 billion in exports, translating to a little more than 25% of India’s current GDP.

Leverage Science & Technology

India has had experience of turning crisis into opportunity by leveraging its scientific, engineering and software skills. The Y2K scare at the turn of the millennium gave the Indian information technology industry the opportunity to showcase its ability to understand a problem, find a solution, and quickly train people to resolve it.

In response to the COVID-19 crisis, India has an opportunity to build a huge bio-medical sector that is innovative, quality conscious and can be scaled up to meet global demand.

It is true that we have the knowledge and the skill base to rank on par with the world’s greatest scientific powers. However, we lack the confidence that is essential to transform us into a science and technology powerhouse.

To position ourselves among the world’s scientific elite, we must, first and foremost, encourage the scientific community to create and market their intellectual property. Entrepreneurial scientists are crucial components in the march towards scientific superiority, as is evident from the success of countries like the United States and Israel.

Scientific Entrepreneurship Needs a Confidence Vote

Look at how Indian entrepreneurs are harnessing innovation to respond to the COVID-19 pandemic.

A small molecular diagnostics company based out of Pune, Mylab Discovery, was able to develop a relatively cheaper and more efficient test for the novel coronavirus indigenously in a record six weeks. Similarly, Mysuru-based Skanray Technologies has drawn up plans to locally assemble ~100,000 ventilators with support from BEL and Mahindra & Mahindra to meet the expected spike in demand. Syngene, the research services subsidiary of Biocon, is working to develop serological antibody detection tests as well as vaccines against COVID-19.

India has a large number of start-ups that are thinking creatively and using cutting-edge technology to develop world class bio-medical products. Yet, many of them are stuck at the stage of taking ‘ideas’ to ‘proof of concept’. Most fail to scale up operations and achieve commercial success because investors are not ready to take the risk of backing them. Even after managing to raise capital and deliver their product, many innovative start-ups struggle to find early adopters in their home country.

A debilitating lack of self-confidence in home-grown scientific skills forces bio-medical innovators in India to seek Western endorsement and validation. The first question they are asked is whether their product has approval from the U.S. Food and Drug Administration or a CE Mark from the European Union.

If we continue to under-value Indian innovation, we will not be able to scale up our science- and technology-based industries. If we do not repose faith in our own capabilities, no one else will.

Owning the Narrative

Going forward, we will need policies that encourage ‘Innovate in India’, ‘Make in India’ and ‘Buy in India’.

Take for example, antibiotics and active pharmaceutical ingredients (APIs), where the Indian pharma industry was quite self-reliant till around 1990. We ended up ceding our position to China because the incentives that Chinese pharmaceutical companies were receiving from their government were not matched in India.

This is the most opportune time for the Indian government to implement the Katoch Committee recommendations and roll out many of the suggested incentives to build self-sufficiency in APIs.

Need to Act Expeditiously

If India is to address this opportunity, it will have to act expeditiously and the Indian government will have to play an enabling role by creating a suitable physical, financial, legislative and regulatory infrastructure. In addition, the government needs to provide roads and ports that support the capital-intensive needs of the sector, as well as, laws and regulations that support the long gestational timelines for the sector. Other such incentives that are essential to put India at the forefront of bio-medical production should also be provided.

Institutions must be encouraged to coordinate with industry to share resources and skills, which will eventually facilitate better and relevant bio-medical research. A concerted effort by public institutions and private enterprise to cooperate towards advancing scientific research will be the ideal catalyst for India’s emergence as a science and technology leader.

We must also attract venture capitalists with incentives to come forward with funding. The private sector will need to invest in building the necessary manufacturing capacity, provided that the enabling infrastructure is in place.

The success of the bio-medical sector can then be replicated across many other sectors in rebuilding the Indian economy after the COVID-19 threat has passed.