Innovation is the key word in the economic growth of nations in modern times, which means developing science and technology to create viable businesses to solve unmet needs. More the investments and focus on innovation, better the unique competitive advantage leading to economic growth. The next key word that follows innovation like an obvious corollary is ‘startups’, which refers to the vehicles through which innovation led viable businesses can be created.
Noted economist Hernando De Soto studied and analysed the reasons behind the prosperity of some nations. Based on his extensive research, he concluded that nations that were able to unlock wealth or assets by making them exchangeable in the marketplace efficiently were able to prosper better than nations that could not take such measures. Though he studied the land as an asset class to form the basis of his studies, later, other economists proposed that this could be applied to other asset classes such as intellectual properties and the vehicles through which these assets can be monetised efficiently, i.e., startups.
DEEP TECH INNOVATIONS, AND AFTER
Some indigenous innovations that reflect the robustness of Indian startup ecosystem, such as battery powered refrigeration device for last-mile problems associated with immunisation (left); a myoelectric prosthetic hand (right)
Image Courtesy: BIRAC
While innovations to create viable businesses can be carried out by individuals and through entities having their own private R&D, most of the Deep Tech Innovations should come out from publicly funded R&D units. Deep Tech Innovations that can bring about disruptive technologies and consequent economic growth are possible only when academic research can be translated into deep tech innovations and commercialised, leading to viable businesses. However, academic research is incentivised through the generation of new knowledge based on a number of publications. Therefore, academic researchers do not pursue technology development beyond the laboratory proof of concept. In addition, the nuances of innovation and technology development are quite different from those of academic research. The latter involves business acumen in addition to scientific excellence. To solve this problem, scientific and research institutions have set up a separate wing called technology transfer divisions within the institution to transfer the technologies generated within the institutions to the industry. However, this is an inefficient process. An institutional mechanism to create ventures or startups from public-funded research institutions is an important means to translate R&D into commercial products.
Image Courtesy: BIRAC
GLOBAL PERSPECTIVES
Countries such as the USA started supporting and nurturing innovations and startups during the initial part of the 20th Century. Before this, the US suffered from an inefficient and corrupt government, low economic growth, and inefficient capital markets. However, some innovations, such as those undertaken by Henry Ford to create Ford cars, innovations to create sewing machines, etc., created a new paradigm of growth and prosperity for the country. For instance, when Ford cars came to the market as an affordable means of commuting for the middle class, people demanded that good quality roads be built. Once the roads were built, many businesses started flourishing beside the freeways in proximity to petrol bunks. Good schools for children sprang up and were in demand because people could commute with ease to drop their children in these schools. People also demanded more efficient governance and had an opportunity to support those political parties that were more receptive to their demands. There was a tremendous increase in employment through these activities. In reality, this one innovation could create big positive changes in society. Many such innovations have made the US a prosperous country. Later, the advent of new technologies, mainly coming out of robust R&D in universities, such as genetic engineering, AI, etc., led to many startups that leveraged these technologies to create successful businesses.
Image Courtesy: The Henry Ford Museum
Japan, for instance, took the lead in innovations in electronics and, through this, could become a prosperous country even though it was devastated in the Second World War. This innovation-led growth happened within a few decades. South Korea was an underdeveloped economy in the 1970s, but by the start of the 21st century, it had become a prosperous economy. One common narrative amongst all the aforementioned examples was the ability of these innovations and startups to disrupt the way people do business, create massive local employment, and bring prosperity.
THE INDIAN SCENARIO
The startup and innovation culture has been at a low ebb since Independence because of the highly closed license-permit-raj that was in vogue. With the opening of the economy in the 1990s, there was some progress, but the real fillip to startup and innovation started in India with the launch of the Startup Initiative in 2016. To put the picture in perspective, there were only 350 startups in India in 2014, but after the launch of the Startup Initiative, the number of startups stands at 1,40,803 as of June 2024, as per the estimates of DPIIT (Department for Promotion of Industry and Internal Trade). This is more than 300 times growth, which is very impressive by any standards. The quantum and depth of the Indian startup story can be gauged from the fact that the number of unicorn startups in India stood at 117 as of September 2024.
The stupendous growth in Indian startup and innovation was largely due to the creation and strengthening of institutional mechanisms, the creation of a large number of incubators across the length and breadth of the country, the allocation of seed funds to these startups, the establishment of Biotechnology Industry Research and Assistance Council (BIRAC) by DBT, Government of India, and various programmes and policies for the growth of the startup ecosystem. While many ministries have started such programmes, the tech-based startups were undoubtedly given fillip mainly through the Ministry of Science and Technology through its various departments and bodies such as DST, DSIR, DBT, etc.
BIRAC AND THE GROWTH OF INDIAN BIOTECH ECOSYSTEM
BIRAC’s success story is a case study that could act as microcosmic and inductive. Microcosmic, because it’s a small, Section 8 PSU set up by DBT and can be studied independently as microcosm, and inductive, because this model can be adopted in various other departments.
Biotechnology Industry Research Assistance Council (BIRAC) is a not-for-profit Section 8 company under the Companies Act 2013 (incorporated under the Companies Act, 1956) and a Schedule B, Central Public Sector Enterprise (CPSE) under Department of Biotechnology (DBT), Ministry of Science & Technology, Government of India. It acts as an interface agency to strengthen and empower the emerging biotech enterprise to undertake strategic research and innovation, addressing nationally relevant product development needs. During the last 12 years, BIRAC has taken up a multitude of activities, from financing high-risk research to supporting nascent ideas, capacity building through creating bio incubation centres as shared infrastructure, handholding through mentoring and training, and policy advocacy for empowering the biotech ecosystem in India. BIRAC is at the industry-academia interface and implements its mandate through a wide range of impact initiatives, be it providing access to risk capital through targeted funding, technology transfer, IP management, and handholding schemes that help bring innovation excellence to the biotech firms and make them globally competitive. In its 12 years of existence, BIRAC has implemented several schemes, networks, and platforms that help to bridge the existing gaps in the industry-academia innovation research and facilitate novel, high-quality, affordable product development through cutting-edge technologies. BIRAC has partnered with several national and global partners to collaborate and deliver the salient features of its mandate. The biotech sector is a complex, multi-disciplinary, knowledge-intensive area prone to high attrition that inherently has a long gestation. It requires risk capital with access to high-end infrastructure and cost-intensive consumables and equipment. BIRAC has emerged as a recognised enabling agency that has nurtured the biotech innovation ecosystem in the country. BIRAC’s ability and commitment have demonstrated, with evidence, the seeding of a globally competent biotech ecosystem. It has resulted in the progression of hundreds of innovations into commercialised products and technologies to address unmet societal needs. With support from the Department of Biotechnology, today India’s biotech innovation ecosystem is recognised not only locally but globally as well.
Tech-based startups in India have received a fillip mainly through Ministry of Science & Technology, leading to indigenous innovations such as full body 1.5 Tesla MRI scanner that can be used in stationary and mobile configuration (right) and a modular phototherapy device for treating jaundice in neonates
Images Courtesy: BIRAC
Biotech innovations, including healthcare, industrial processes, agritech & food, energy, degradable plastics, and biofuels, are set to play a crucial role in progressing toward a sustainable future. The number of biotech startups has significantly grown from less than 50 in 2012 to 8500+ in 2023. With the Government of India’s favourable policies and support and BIRAC as a central enabler of the Biotech Innovation Ecosystem, India’s bioeconomy has increased from US$ 44.10 billion in 2017 to US$152.60 billion in 2023. This is further expected to grow to US$300 billion by 2030 through bio-innovation and biomanufacturing. The launch of the BioE3 policy of the Government of India in September 2024 will allow the economy to grow further by encouraging the transformation of chemical processes
to develop products into one utilising bioprocesses. This will preserve the environment through ecologically sustainable processes, generate employment, and create robust economic growth.
BIRAC, through its flagship programs Bio NEST & E-YUVA, has supported 95 bio-incubation facilities in 25 states/ union territories across the country. These incubators provide nurturing grounds to nascent startup ideas by providing
access to high-end infrastructure, specialised and advanced equipment, business mentorship, IP, legal and regulatory
guidance, and networking opportunities. These facilities are located within universities, research institutes, research hospitals, or as stand-alone centres. The centres have also been seeded in Tier-II and Tier-III cities, obviating the need to dislocate from their hometowns due to lack of local opportunities.
BIRAC’s BIG programme has been instrumental in nurturing a pipeline of biotech startups. It is a flagship programme of BIRAC, which provides the right mixture of funding fuel and enabling support to young startups and individual entrepreneurs for incubation, team building, startup incorporation, equipment, operations, mentoring, training, etc. The BIG scheme started in 2012, is one of the largest early-stage biotech funding programmes in the country. Funding grant of up to Rs 50 lakhs for a period of 18 months is provided for the translation of innovative ideas to proof-of concept. Follow-up funding schemes under SIBRI, BIPP, AIR, and CRS are available to startups.
BIRAC equity schemes constitute another major vertical of support for startups and biotech companies. SEED
(Sustainable Entrepreneurship and Enterprise Development) Fund; LEAP (Launching Entrepreneurial Driven Affordable Products) Fund and Biotechnology Innovation (AcE-Accelerating Entrepreneurs) Fund-of-Funds, which
offer support to the early-stage startups for differential growth, have helped the entities to attract private investment
from Angels and VCs. By FY 2023-24, close to 210 startups have been supported through equity support under SEED and LEAP. Out of these startups, more than 60% have raised follow-on funding amounting to about Rs 856 crore. There has been a significant increase in the number of startups getting investments from angels, HNIs, and early-stage VCs, contributing to the growth story of the biotech industry. AcE-Fund-of-Funds has 14 daughter funds with BIRAC’s investment commitment of Rs 174.50 crore. This has successfully mobilised Rs 1172 crore investment in 88 biotech companies.
INITIATIVES BY NSTEDB
NSTEDB was set up under the aegis of DST in 1982 to promote knowledge and technology driven enterprises. It has
helped set up many Science and Technology Parks and incubation centres and lent seed fund support to many startups through various schemes such as NIDHI Prayas, NIDHI Incubation Support, NIDHI Seed Fund Support schemes, etc.
INITIATIVES BY DSIR
DSIR mainly supports startups and industrial bodies engaged in R&D by providing them with certifications. These certifications to carry out R&D activities help startups to carry out R&D activities following various compliances.
This has created a mechanism for the startups to seek government funds and grants. DSIR also started a first of-
its-kind seed fund scheme called the Technology Entrepreneurship Promotion Programme (TePP). This has been replaced by the Promoting Innovations in Individuals, Startups, and MSMEs (PRISM) scheme, which is an enlarged version of TePP. It also runs an A2K+ scheme, which is Access to Knowledge for Technology Development and Dissemination to startups and industries.
INITIATIVES BY THE DEPARTMENT OF AGRICULTURE AND COOPERATION
Rashtriya Krishi Vikas Yojana (RKVY), under the aegis of the Department of Agriculture and Cooperation, has initiated various funding schemes for setting up Agri Incubation Centres and to seed fund agri startups.
INITIATIVES BY DPIIT
Under the Startup India initiative, eligible companies can get recognised as startups by DPIIT in order to access a host of tax benefits, easier compliances, IPR fast-tracking, and more. DPIIT, through its Startup India initiative, has launched various schemes such as National Startup Awards, Startup India Investor Connect, state ranking framework, seed fund scheme, etc. As of date, there are 148620 DPIIT-recognised startups in India.
ATAL INNOVATION MISSION
Atal Innovation Mission was set up under the aegis of NITI Ayog. The objective was to set up world-class incubation centres that could act as nurturing hotbeds for innovative startups. It also has set up Atal Tinkering Labs in schools across India.
PREPARING FOR THE NEXT PHASE OF GROWTH OF STARTUP ECOSYSTEM
India has created a very robust startup ecosystem in the last decade through effective policies and schemes. The startups have been able to get seed funds through various means to undertake proof-of-concept studies. They have been able to use plug-and-play laboratory facilities set up through various schemes. However, there are bottlenecks for startups to scale up. The cGMP facilities, scale-up bioreactors, bigger spaces for expanding teams, and lack of early-stage venture capital are some of the major bottlenecks. In the case of biotechnology, the recently launched BioE 3 policy is geared towards addressing many such bottlenecks. Also, the pipeline of deep tech disruptive technology based startups has to be strengthened.
*The writer is Managing Director, Biotechnology Industry Research Assistance Council (BIRAC) and Managing Director (Addl Charge), Bharat Biologicals and Immunologicals Corporation Limited (BIBCOL), Department of Biotechnology, Government of India, New Delhi.
