It is ironic; but, India’s lack of economic development of the past several decades has become a boon providing for talent of whatever quality at globally dirt cheap wages. The economic poverty of the previous generations has in itself turned into a merit. Had India been a richer country earlier, its labour — university-educated or otherwise — would have been more expensive.

India’s niche market has been a kind of work for which a passable technical knowledge and a passable quality of work is enough. “Low end work, low quality needs and low price” is the slot that India has successfully occupied in the global market.

Lakhs of degreed engineers are being churned out from universities every year and their numbers are ever increasing. Now with the hopes of a boom in the market for technical labour in the biotech sector, lakhs of biotech graduates will be produced.

The premium is not on some high-end work or original research, but on being able to perform several sundry jobs that are helpful to the companies that outsource jobs. Even for the Knowledge Process Outsourcing (KPO) that is hoped to be the next wave in India, the need is for providing a support service. Indian engineers and science graduates are able to provide that support. The market does not need excellence; it needs that you fit the bill. No one knows this better than private technical colleges that have sprung up all over the country, dishing out education of dubious quality.

One may ask: Why didn’t India succeed in the exports of manufactured products, the way it is being successful in the IT outsourced work? The point here is of “quality requirements” of the outsourced work. In manufacturing, the outsourced component has to be 100 per cent fit to be incorporated in the final finished product. If a casting or an auto-component goes into the automobile or other final product, it has to be perfect when delivered. There is little or no scope for tinkering later.

In short, neither high-tech product nor a high quality job has been India’s forte — not until now. Globally price-competitive basic technological labour has been India’s strength. Nothing wrong with that. Only thing is that this “niche” may get narrower and narrower as India’s technical labour gets more expensive and the rupee gets stronger vis-à-vis the dollar and/or pound. Already, several IT companies are experiencing this. This is inevitable in a strategy that is, ironically, dependent upon national poverty.

The way out is to develop a higher level of technical expertise and higher-end products in the IT industry and to develop improved design/R&D capabilities and improve the quality of manufactured products. Sadly, India is lacking in this respect.

With the notable exception of atomic energy and space research, R&D has been almost non-existent in all other sectors. Most of the governmental research establishments have been doing just lip service to R&D. National Laboratories and even the DRDO have been quite inefficient and ineffective. Academic institutions and universities, which are supposed to foster research, have remained money-spinning degree-dispensing organisations with no focus on research.

While India’s primary and secondary education has been inaccessible to a considerable percentage of its citizens, its university education has failed to go beyond the basic level of competence. Even the famed “top level” institutions of “national importance” have mainly produced research of doubtable quality with little relevance to the country’s problems and perspectives.

India’s position as a producer of cheap products is not tenable in the long run. Indian industry has to move towards a different “niche” in the global market. It has to upgrade its quality and deliver products — knowledge or physical — of improved design that can compete successfully in the global market. This requires a total changeover in Indian industry’s attitude towards innovation and design and development of newer and improved products for the market. Until today, most of our industries have relied on technologies and designs that have been licensed to them. Much of the licensed technology and designs are internationally outdated or obsolete. Joint ventures with foreign partners generally look at technologies and products that have a large domestic market.

Price as a competitive advantage is going to be only a short-term phenomenon. India’s industry, whether of the brick-and-mortar kind or of the IT/BT variety, has to look beyond the shaky ground of price advantage and plant itself on a firmer ground of globally innovative products and services, which require far more effort into R&D.

India’s universities, in line with this challenge, need to radically improve their post-graduate education, particularly their research programmes. An innovation and research culture has to pervade the country. This is particularly so, if the country wants to pursue global advantage in technological products and services. Global competitive advantage is a nationwide effort and not restricted to the industry alone. It is an attack on multiple fronts.

(The writer is a retired professor, Indian Institute of Management, Bangalore)