Knowledge Economy in India

Synopsis: India has lost its leadership in the production of a knowledge economy. But still India maintaining leaderships in few sectors like space, pharma and information technology.

India as Knowledge economy


  • The global success of the Indian Space Research Organisation (ISRO) and the pharmaceutical industry signifies the diplomatic potential of India’s Knowledge Economy(production of goods and services is based principally on knowledge-intensive activities).
  • For instance, recently ISRO launched Brazil’s Amazonia-1 satellite and India exported the COVID-19 vaccine to Brazil, as part of its “Vaccine Maitri” diplomacy.
  • However, India does not hold its leadership position in the production of knowledge Economy like in the 1950s.

What was the reason behind the success of these two sectors?

  1. Sustained state support: India’s current knowledge economy leadership in space and pharmaceuticals is due to 50 years of sustained state support.
      • It was Prime Minister Indira Gandhi who authorised the creation of ISRO in 1972.
      • Again, it was her decision to enact the Indian Patents Act, 1970. The Act facilitated the growth of the domestic pharmaceuticals sector.
      • Subsequent governments have all contributed to the development of both industries.
  2. The credit to Indian engineering, scientific and technological talent. There is large scale development of educational institutions throughout India. This made Indian students pursuing world-class standards at a fraction of the cost compared to developed countries.
  3. With these initiatives, India became the leader in the Knowledge Economy in the space and pharma sector. Further, India built the capacity to place satellites of several countries at globally competitive rates and also able to supply drugs and vaccines at affordable prices to developing countries.
  4. Moreover, It has to be noted that these two sectors were successful even when the western countries created constraints for indigenous technology development. For instance,
      • Unilateral sanctions were imposed by the US to deny Indian industry access to technology and markets.
      • A multilateral regime for intellectual property rights (IPRs) protection was created, under the aegises of the World Trade Organisation.
      • Even today, Many developed countries oppose India’s Compulsory Licence of medicines.

Proof for India as a Knowledge Economy in the past:

There were many instances in the past that shows India’s knowledge is in high demand. They are,

  1. Students from across Asia and Africa sought admission to Indian universities for post-graduate courses.
  2. Indian expertise was sought by global organisations such as the FAO, UNIDO, etc.
  3. The government of South Korea even sent its economists to the Indian Planning Commission till the early 1960s. They got their training in long-term planning.
  4. Rail India Technical and Economic Services (RITES), had acquired a global profile with business in Africa and Asia.
  5. The development of India’s dairy and livestock economy also attracted global interest.

Why India its leadership in the Knowledge Economy?

Irrespective of the dominant position during the 1950s, India lost its leadership in the production of the knowledge economy. The reasons are,

  1. Flight of Indian talent to other developed countries. It had accelerated since the 1970s and has sharply increased in recent years.
  2. China has emerged as a major competitor offering equally good S&T products and services at a lower cost.
  3. The appeal of higher education in India for overseas students has decreased. This is the biggest setback for India trying to become the powerhouse of the knowledge economy. This is because of two reasons,
      • The quality of education offered in most institutions is not up to date. The education institutes in India still teach old technologies instead of new ones.
      • The social environment offered in India is no longer as cosmopolitan as it used to be. There is a significant growth in the narrow-minded ideologies in India.
  4. Lack of political and intellectual support to the development of India’s knowledge base and an inadequate commitment by the government. For example, the Technical Education Quality Improvement Programme (TEQIP) is discontinued without an alternative programme hurts the quality of technical education in India.

The success of the ISRO and Pharma sector is a tribute to public policy, government support, private sector involvement and middle-class talent. This has to spread across the sector to regain India as the leader of the Knowledge Economy.

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