In this episode, Pranav sits down with Rakesh Basant, Professor of Economics at IIM Ahmedabad, to understand how innovation actually works in India and what it takes to build a thriving ecosystem from the ground up.
We cover:
- How process innovation differs from product innovation, why Indian firms struggle to transition between the two, the importance of tacit knowledge, and why Indian academia is historically disconnected from industry.
- It also covers intellectual property trade-offs, the Indian pharma story, complementary assets, temporary protectionism, the necessity of primary mass education, and the reality of IIM Ahmedabad’s entrepreneurial legacy.
Time Stamps:
0:00: Introduction
1:59: The three Ps of innovation (process, product, practice) and why the process-to-product transition is so hard for Indian firms.
11:51: Competition vs. innovation: why there's no "optimal" level of competition a policymaker can target, and the case for temporary, transparent protection.
24:14: Why Indian pharma is stuck in process innovation: the state funds and performs R&D, unlike NIH/NSF-style grants that de-risk private R&D.
30:29: Complementary assets: why inventors need manufacturing, distribution, and M&A/technology markets to capture value from new technology.
43:06: The Telco lesson on protectionism: "You're protected for 10 years, get your act together" and the "virtuous cycle" of learning from multinationals.
1:00:03: Why IITs/IIMs couldn't hold equity in startups they incubated, and the separate-legal-entity workaround.
1:27:07: Busting the myth that IIM-A only produces managers: 35–40% of alumni become entrepreneurs within 15 years.