India’s Innovation Index

With India among the fastest growing economies in the world, the next big challenge is to sustain that level of growth for a longer period. The increasing role that innovation plays in acceleration economic growth and enhancing competitiveness is...

With India among the fastest growing economies in the world, the next big challenge is to sustain that level of growth for a longer period. The increasing role that innovation plays in acceleration economic growth and enhancing competitiveness is evident. In Sweden, the understanding of the importance of innovation readiness has brought prosperity and better living standards.

With a population of over 1.3 billion, which keeps on growing at 1.1 percent a year — India faces scarcity on a large scale across the board: from water and food to energy and to primary education and basic health care. To overcome these challenges India must transform itself from a factor-driven to an innovation-driven economy by efficiently using its existing resources and in turn become a global innovation hub. To be successful in this endeavor, the country must make the right institutional, industrial, and policy reforms.

Photo courtsey: Niti Aayog, Govt of India

Recognizing the role of innovation as a key driver of growth and prosperity for India, NITI Aayog with Institute for Competitiveness as the knowledge partner, have brought out the India Innovation Index and Report. The Report evaluates the progress of innovation readiness in states and union territories, highlighting the obstacles that deter governments, businesses, and individuals from fully capturing the benefits of innovation.

India Innovation Index measures innovation inputs through ‘enablers’ and innovation output as ‘performance.’ Four enabler pillars capture elements of the state economy that act as inputs to innovation environment: Human Capital, Investment, Knowledge Employment, Business Environment, and Safety & Legal Environment. Two performance pillars- Knowledge Output and Knowledge Diffusion- capture the performance.

The Index intends to perform two functions: to help in better understanding of a state’s innovation ranking and relative performance by incorporating key indicators relating to six pillars that can be used to understand the performance of a state with regards to innovation capabilities and helping empower states to improve their innovation policies while leveraging their strengths and overcoming challenges.

The index shows that the innovation ecosystem of the country is strong in south and western parts of India. In fact, three of the top five major states are from southern India. Delhi and Haryana seem to be an exception to this rule and seem to be doing well on the Index. “There seems to be a west-south and north-east divide across the country,” the report states.

Karnataka has topped the performance parameters and is also among the best in infrastructure, knowledge workers, knowledge output and business environment. Maharashtra has the best enabling environment for innovation despite its overall third rank among the major states. Tamil Nadu and Kerala top the list for human capital and Haryana has the best safety and legal environment, according to the report. Sweden and India agreed to deepen the bilateral collaboration in the field of innovation through a strategic innovation partnership. The partnership is based on the principles of co-creation and seeks to accelerate collaboration between government, academia and private sector actors in both countries. It is therefore interesting to note that there is a Swedish company present in every state of India. However, the following states have more presence than others:


107 companies are present in the state and more than half have their head-office here. The direct employment created is more than 35,000 people. This is the manufacturing hub for Swedish companies as 26 companies have production plants in the state; the majority are in Pune.


46 companies have presence in Gujarat and employ more than 8,000 people. Six company have production set up in the state.


176 companies are present, 64 have their head-offices here. The companies employ close to 35,000 people. 13 companies have production plants in the area.


23 companies are present and currently employ 5,900 people.


95 companies are present, employing more than 42,000 people. 41 companies have set up their head-office here. 14 companies are manufacturing in the state.


More than 22,000 people work for the 62 Swedish companies present in the state. 14 companies have their head-offices here and 8 are manufacturing.

Findings of the index indicate the need for more research and development spending, improvement of top educational institutions and greater coordination and collaboration with the industry at the national level to improve the overall innovative ecosystem. Looking ahead to the upcoming India-Sweden High Level Dialogue on Innovation, there will be many opportunities for Sweden to share its own innovation growth story including insights on the multiple helix model with India.

Download the report here.