Friday, May 24, 2024

Empowering Innovation: Maximising Technology Transfer & Seamless Absorption

By Commander Rahul Verma (r) 

Mahatma Gandhi once said, “The future depends on what you do today.” Embracing science and technology today lays the groundwork for a prosperous and dynamic India tomorrow. Science and technology are not only the foundation of a new Indian society, rising from the ashes of the erstwhile British Empire, but they also embody the essence of progress in themselves. Beyond merely revitalising the Indian economy, they represent new avenues of thought and behaviour, driving transformative change. In both modern and traditional India, the dynamics of power and authority significantly shape the patterns of change. 

Technological development does not exist in isolation from politics; instead, it mirrors the goals, procedures, and values established through the political process. The assimilation of new technologies can profoundly reshape Indian society and disrupt cultural norms, including those distinct from the conventional caste, creed, and religious structures. An essential objective of technological advancement is the inclusive incorporation of all segments of society into the national political and economic fabric. 

The present policies are helping to do that in the form of Innovations For Defence Excellence (iDEX), Invest India or Startup India. The pursuit of a competitive edge has become paramount in this era of fierce rivalry, not only for countries but also for private companies. Whether engaged in creating or commercialising dual-use products, businesses operating in price-driven sectors must adopt new machinery and technologies to enhance efficiency and productivity. 

On the other hand, companies in sectors witnessing frequent market entries of advanced products have no choice but to innovate. Embracing new technologies becomes necessary to remain at the forefront of their respective industries. By adopting the latest technologies, businesses can improve their management structures, establish superior control and communication, and adapt to the ever-evolving market demands.

The procedure by which technology is distributed is termed ‘technology transfer’. This is a process of the transfer of knowledge by the transferor to the recipient and may or may not be legally binding. Technology transfer, which is also known as transfer of technology (ToT), is the process of transferring technology from the place of its origination to the wider distribution among larger groups of people and places. Technology travels through many channels and universities to businesses. 

It then moves from large multinational corporations (MNCs) to smaller companies, from governments to businesses to startups, across borders, etc. Technology transfer transpires to share skills, technologies, knowledge, manufacturing methods, and facilities for government-to-government (G2G), universities and other institutions. The goal is to ensure that scientific and technological advancements are within reach of a broader range of users, enabling them to subsequently enhance and harness the technology for creating novel products, processes, applications, materials, or services. 

Technology transfer is also related to knowledge transfer. The horizontal transfer of technology is the movement of technologies from one area to another. Generally, technology transfer is primarily horizontal, but it can also be vertical. It is called vertical transfer when technologies move from the applied research centres to the research and development (R&D) departments.

There are various procedures for transferring technology among nations. Each method of technology transfer depends on the technology analysis, investment resources, the strategy of cooperation with the company’s supplier, and the technical capacities of the company. While choosing the technology transfer method, the receiver must understand that the more complex the technology, the closer the connections between the buyer and the supplier will be. Traditionally, the technology transfer used to end with the delivery of the equipment. This equipment itself does not generate new competencies. The main challenge is when the company’s work changes after the technology transfer. This includes the transfer of knowledge, skills, and intellectual property rights in the technology transfer process. 

Bill Gates famously remarked, “Innovation is moving at a scarily fast pace.” India must actively adopt and harness cutting-edge technologies to shape its future to keep pace with this rapid progress. In broad terms, technology transfer typically includes the tangible transmission of blueprints, plans, information, software programming, technical papers, and resources. It also covers technical support to aid the recipient in effectively adopting the transferred technology, which might involve training, skill enhancement, and various forms of guidance. Depending on the extent, breadth, and depth of the technology being transferred, the recipient could attain the ability to the ‘Build to Print’ or ‘Built to Specs’ (also referred to as ‘Build to Design’) capability. 

The term ‘Build to Print’ denotes the recipient’s acquisition of the ‘know-how’ capability to assemble or manufacture the original product or its components as per the technology provider’s instructions. Typically, all licensed production is based on the transfer of ‘Build to Print’ technology. The term ‘Build to Specs’ (Specifications) refers to the transfer of the ‘know-why’ aspects of technology that goes into the making of a product from scratch according to specifications provided by the customer. The receiver gains expertise not only in reproducing the initial product using this technology but also in adapting it and creating new prototypes through the knowledge they have acquired. 

In other words, with the ‘Build to Print’ technology, the recipient only acquires the ‘know-how’ of the manufacturing processes to make that product, with or without minor modifications, which the technology provider originally manufactures. But, with the Build to Specs technology, the recipient acquires the ‘know-why’ or overall knowledge, which enables it to use the transferred technology to manufacture products that can and at times, vary from the original product. 

Over numerous decades, India’s public and private sector defence suppliers have collaborated with manufacturers from various nations, such as Russia, France, Israel, South Korea, Spain, the United Kingdom (UK), and the United States of America (USA). This collaboration aimed to obtain technology for producing military equipment for Indian Armed Forces. The above activities in most places are primarily directed toward development (not innovation), absorption (not creation), adaptation and updation. 

Planned indigenisation/import substitution programs, in consonance with liberal technology import, have accelerated these limited R&D activities in line with material substitution, improvements in product designs/modifications, intelligent imitations with minor modifications, etc. Consequently, heightened priority has been assigned to the adaptation of products. The essence of successful assimilation is observable within these entities that integrate foreign technology to harmonise with domestic conditions. Nonetheless, the progression of this endeavour has been deliberate, and substantial reliance on technology providers remains prevalent. The acknowledgement of quality control as an imperative has been resolute, irrespective of the unit’s autonomy in maintaining a dedicated quality control division. As policymakers, it is imperative to navigate these dynamics to foster a more self-reliant technological ecosystem.

Like us, the future of the Chinese economy lies in innovation, and everyone in China and around the globe knows it. But that hasn’t always been true. Innovation didn’t drive the manufacturing miracle that has unfolded in China over the past half-century, during which some 700 million people have been raised or lifted themselves out of desperate poverty. Instead, the driver has, in large part, been what might be called Brute-Force Imitation. Relying on a seemingly limitless supply of cheap labour provided by the hundreds of millions of ambitious workers born during the postwar baby boom, China devoted itself prodigiously to the production of other countries’ innovations. 

The effort enabled a country that missed the Industrial Revolution to absorb the world’s most modern manufacturing advances in just a decade or two. Fittingly, China earned a reputation as a global copycat. But that’s changed now. It’s the aspect of China’s innovation ecosystem filled with its hundreds of millions of hyper-adoptive and hyper-adaptive consumers that makes China so globally competitive today. Ultimately, innovations must be judged by people’s willingness to use them. And on that front, China has no peer. This is one aspect which we can definitely learn and try to adopt fast.

Indian Private Equities and Venture Capitalists (VCs) must also become more adventurous and risk-takers before we start running on the path of self-reliance, specifically in the Aerospace and Defence (A&D) sector. As defence budgets decline in advanced Western countries, the money available for military R&D is reducing disproportionately. Consequently, advanced weaponry being developed today contains a great deal of ‘commercial off-the-shelf’ (COTS) equipment and its ruggedised but freely available version, ‘military off-the-shelf’ (MOTS) equipment. Smart ideation and advanced design proficiencies can blend Commercial Off-The-Shelf (COTS) and Military Off-The-Shelf (MOTS) technologies into exceptionally potent weapon systems and platforms. 

It’s worth remembering that Apple crafted the iPad primarily using technologies that had long been accessible. The triumph was in envisioning a device that users would find valuable and then executing the structural breakthroughs essential for its creation. Similarly, China has reconfigured existing technologies to construct the Dong Feng-21B anti-ship ballistic missile, referred to by US strategists as the “aircraft carrier killer,” employing a similar approach.

While the latest cutting-edge technology may not be directly supplied by the US, it does surpass India’s current capabilities significantly. Additionally, INDUS-X has provided an avenue for Indian and American startups to collaborate and jointly create specialised products, leveraging each other’s strengths. Thus, this isn’t merely a surface-level arrangement; however, the true evaluation will lie in the extent to which India’s technological prowess is enhanced.

The question at hand is whether producing a product within India equates to a technology transfer to the Indian population. Will this enable us to ascend to the next echelon of technological advancement? We have a history of manufacturing MiG-21s, Sukhoi aircraft, and Dhatu Nigam’s alloys. Under the agreement, Tata Advanced Systems Limited (TASL) has been chosen as the Indian Production Agency (IPA) by Airbus DS. Tata Advanced Systems will manufacture 40 C-295 aircraft to be used directly, followed by providing maintenance, repair, and operations (MRO) support for the total fleet of 56 aircraft that the Indian Air Force (IAF) intends to acquire. However, the true measure of success will be our ability to independently develop Medium Range Multi-Role (MRMR) or Long Range Multi-Role (LRMR) aircraft within a decade from now.

Hence, the act of production utilising borrowed technology does not inherently encompass the absorption and advancement of that technology. True technological development necessitates an understanding of both the ‘know-how’ and the ‘know-why’. While we can observe and replicate the production process, comprehending why certain steps are taken, and the underlying rationale is equally crucial. Proprietors of advanced technology often withhold this vital knowledge from others. Nobel laureate Kenneth Arrow underscored the concept of ‘learning by doing,’ emphasising that knowledge is acquired through the production process. 

Furthermore, Schumpeter’s framework suggests that technology evolves through phases of invention, innovation, and adaptation. Simply using a product does not automatically confer the capacity to produce it unless the technology is absorbed and further developed. That requires R&D. For more complex technologies, say, aerospace or complex software, there is ‘learning by using’. When an aircraft crashes or malware infects software, it is the producer who learns from the failure, not the user. Again, the R&D environment is important. In brief, using a product does not mean we can produce it. Further, producing some items from ToT does not mean that we can develop them further. Both require R&D capabilities, which thrive in a culture of research.

R&D culture thrives when innovation is encouraged. The pivotal role of government policies lies in determining whether the unimpeded exchange of ideas is facilitated. The selection of thought leaders or those who merely echo authority in spearheading institutions is equally critical. The stance towards welcoming constructive critique versus stifling it also holds immense significance. Additionally, the willingness of the government to alter its policies, often succumbing to pressures from vested interests, carries weight. 

Policies characterised by instability heighten the risk associated with conducting research, thereby eroding its integrity and discouraging industrial engagement. This, in turn, results in recurrent reliance on technology imports. Under the current leadership of our esteemed Prime Minister, every ministry and bureaucracy is actively championing the cause of ‘Atmannirbhar Bharat’ (Self-Reliant India). Numerous changes have been implemented, and further initiatives are underway to fortify this vision.

The main interface between the generation, transfer and diffusion of technology and competition law relates to controlling restrictive business practices in licensing agreements. It is highly recommended that there should be an audit of all the said technology transfers which have happened specifically to Government funded labs, Defence Public Sector Undertakings (DPSU), Public Sector Undertakings (PSUs) etc, in the last five years. The audit should include all items being manufactured in India by technology transfer. 

The results of these be made into iDEX Problem Statements, allowing homegrown startups to either replicate it as per the current norms or even further add value to create a new product on their own. The agencies that are currently manufacturing products based on technology transfers should also come forth with a proposal on how they will eventually phase out production via technology transfer and take up the production of the indigenously developed technology once it has fructified.

In the context of India, technology represents an idea. However, it is notable that many authority figures within the country are resistant to being questioned. This can be observed, for instance, in schools where bright students asking probing questions are often viewed as troublemakers. The educational emphasis primarily revolves around completing coursework for examinations, promoting rote learning, which hinders students’ ability to grasp the material being taught truly. Advancing knowledge necessitates critiquing the existing state of affairs and challenging the established orthodoxy and status quo. 

Consequently, creative and independent thinkers who contribute socially relevant knowledge may also find themselves at odds with institutional authorities, facing characterisation as troublemakers. Whether it is Swadeshi, XD Tech, 3rditech, Tardid Technologies, DV2JS, Siliconia Technologies, Tsalla Aerospace, Sagar Defence, Jishnu Communication, Nitrodynamics and our other iDEX Winners, they all have gone beyond the laid down procedure and entry barriers created by funding, acceptance and marketing etc. to design and produce Global First tech products. Regrettably, the suppression of dissent, a cornerstone of knowledge creation, continues to be viewed as an obstacle requiring elimination. 

This only serves to perpetuate the constraints imposed by a societal structure characterised by feudalism and hierarchy, hindering the unhindered exchange of ideas. Additionally, accepting failure is a pivotal facet of idea incubation. Impressively, initiatives like Naval Innovation Organisation-Technology Development Acceleration Cell (NIIO-TDAC) and iDEX Supporting Pole-Vaulting in R&D through Innovations for Defence Excellence (SPRINT) have effectively showcased that by nurturing failure and embracing strategies such as spiral development, the Minimum Viable Product (MVP) concept, and Minimum Order Quantity (MOQ) principles, a path of progress emerges. 

It is imperative that our organisations and systems, whether within the private or public domain, cultivate more trailblazers who are unafraid to challenge the status quo. For it is through these mavericks that our journey towards true innovation and self-reliance will be illuminated.

Cdr Rahul Verma is a recently retired Naval Officer who was posted as Unmanned and Aviation Subject Matter Expert at TDAC of the Naval Innovation and Indigenisation Organization.He is a Seaking Pilot, RPA Mission Commander and an Instructor. He has over 4000 hours of extensive flying experience. He has been a key member of the SPRINT initiative. He holds a Master in Aerospace and Law, PG Diploma in Drones and Autonomous Systems and PG in Product Management, EPBM. He has been judged the student of the year at IIT Bombay – Washington University MBA program 2023. 


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