'Innovation to be driven by Indian start-ups, MNCs'

The huge domestic market with its untapped potential and the growing start-up ecosystem will drive technology innovation in the country, says a study report from consulting company Zinnov. The report ‘India Innovation’s Thrust - Driven by Start Ups & MNCs’ also said India is increasingly moving towards becoming a technology-enabled economy and is at the cusp of becoming an epicenter for global innovation.

Releasing the report Pari Natarajan, Co-Founder & CEO, Zinnov Management Consulting said: “India is inherently an innovative country and companies need to get their strategies right to realise the true potential of this market.”

In India, recently the government started showing more interest in technology and has started many technology driven initiatives for an inclusive growth. For example, the Government has earmarked $9 billion for investment in IT initiatives over the next five years. The government has also planning to implement many project as part of the e-governance programme including the UIDAI, automation of employment exchange, land records which will also help the new start-ups to build applications..

Stressing on the product start-up scene, the study said, India has to make significant contributions on the product front compared to the services business. In the first quarter of 2011, there were 26 startups, which is expected to grow to 150 by the end of the year, indicating that the birth rate of new companies is coming back to the pre-recession levels. Bangalore and NCR has most of the Indian product startup companies, it added. About 75 per cent of the product startup companies are in the digital as well as business and productivity software space of which 64 per cent of the digital companies are into market place and mobile area.

Further the report said that the VC investments in India have increased in 2010 to $540 million from $475 million in 2009.

“Many companies have successfully created new innovation paradigms and are using India to export innovation to global markets. Some start-ups are innovating with technology and business models also. This is fuelling innovation growth and encouraging other companies to follow suit,” says Karthik Ananth, Director-Market Expansion, Zinnov Management Consulting.

The analysis concludes on the note that co-creation between Indian start-ups and MNCs is the best way forward for driving the innovation story. Many MNC firms are leading this agenda through multiple initiatives namely venture funds, evangelism programs, partnership with angel networks and outsourcing services to very small early stage service providers and trying to scale them as dedicated service providers.