Technological foundations of economy

(General Studies III – Economy section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. General Studies III – Sci & Tech section – Achievements of Indians in Science & Technology; Indigenization of Technology and Developing New Technology.)

• Technological foundations play a crucial role in driving economic growth and development.
• With advancements in digital infrastructure, innovation in renewable energy, semiconductors, and artificial intelligence (AI), India is positioning itself as a hub for technological progress.

Global Context –

• China is aggressively pursuing advancements in technology to focus on transitioning from labour-intensive to technology-intensive production. It is prioritising sectors like electric vehicles, new materials, commercial spaceflight, quantum technology, and life sciences.
• The USA is investing heavily in infrastructure, semiconductor production (CHIPS Act), and renewable energy (Inflation Reduction Act) and it is also forming global technology coalitions with allies, including India, through initiatives like the Quad and iCET.
• Europe, led by French President Macron, aims to reclaim technological sovereignty and close gaps with the US and China through investments in AI, quantum computing, space, biotechnology, and new energy technologies.

India’s Technological Strategy –

India’s technological strategy has been evolving over the years, with a focus on leveraging technology for socio-economic development. This is evident from the following points:

• Digital Service Delivery: The government has been focusing on digital service delivery to improve governance and public service delivery with initiatives like the ‘Digital India’ program and UMANG App.
• Investments in Renewable Energy: The country has set an ambitious target of 500 GW of renewable energy capacity by 2030. In 2024, India witnessed an 83% increase in investments in renewable energy projects.
• Semiconductor Production: Efforts are being made to attract foreign chipmakers. ISMC Digital (consortium of investors), is planning to build a $3 billion manufacturing facility in India.
• Quantum Computing: India has launched the National Quantum Mission (NQM) with a budget outlay of Rs.10,371.92 crore aiming to develop and deploy quantum technologies across sectors like healthcare, defence, and finance.
• Enhancing India’s Space Power: India has been making significant strides in space technology with the country ranking 5th globally with over 400 space companies.
• Private Sector Participation in Technology: The government has announced the Indian Space Policy 2023, which enables end-to-end participation of Non-Governmental Entities (NGEs) in all domains of Space activities

Challenges in Improving Technological Foundations of Indian Economy –

• Education shortcomings: The overall Gross Enrolment Ratio (GER) in higher education remains low at around 27.3% (World Bank, 2022).
• Skill Development bottlenecks: Low higher education GER creates a skills gap, as a World Bank report highlights, 80% of jobs in the coming decade will require digital skills.
• Research and Development (R&D) Ecosystem: R&D expenditure hovers around 2% of GDP, significantly lower than developed nations like Israel (over 4%).

• Infrastructure Bottlenecks: Only around 57% of Indians have internet access (as of 2023), concentrated mainly in urban areas.
• Policy and Regulatory Framework: The complex Intellectual Property Rights (IPR) regime in India can be a hurdle for SMEs.

Funding and Investment Landscape: Startups often struggle to secure funding with limited access