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Home > Nanotechnology Columns > Vivek Srivastava > Reaching the critical mass in Indian nanotechnology industry

Vivek Srivastava

Nanotechnology industry in India is largely at the exploratory stage with a number of large organizations scouting for opportunities to exploit emerging technologies. A small number of start ups have been founded but are experiencing teething problems due to limited venture capital and lack of experienced managers. Availability of low cost technical skills and rapidly expanding market, has thrown up a number of opportunities in different sectors. If synergies between nanotechnology, biotechnology, semiconductors, and IT can be identified and exploited, India stands to emerge as a leading niche player in the nanoworld.

June 18th, 2007

Reaching the critical mass in Indian nanotechnology industry

Spike in nanotechnology activity in the commercial sector

Indian economy has been growing consistently at 8-9% over the last 5 years and has led to a spate of new products in the market place. Indian and global corporate are rushing to grab a share of this expanding and potentially huge market, and are investing in technology to improve their products. Leading Indian companies like Reliance, Tata Group, Mahindra & Mahindra, and Intel India are making investments in nanotechnology both for improving products their existing businesses and exploring other businesses for the next generation and have pumped in close to $250 million in domestic markets. For example, Tata chemicals is looking at entering the biotech business using nano-science as a base and focusing on high value fertilizers at its R&D lab in Hyderabad, while Reliance has set up a nanotechnology centre to concentrate its R&D efforts in the area. Nanotechnology is making inroads in the automobile accessories segment and Indian automobile OEM, Mahindra & Mahindra, are investing in technologies like wiper free windscreen and nano-ceramic window films.

A handful of start-up companies have emerged in the last 4-5 years. Out of about a dozen start ups founded since 2002, 50% of them are providing consultancy, market research and training, while product development efforts are directed towards chip design and development, nanomanipulation, nanomedicine, and nanomaterials (e.g. carbon nanotubes, silica and alumina). Almost all these start-ups are at product development stage with limited commercial success. Lack of seed capital is hampering these product development efforts. Indian venture capital firms, especially after the IT bust at the turn of the century, are risk averse and are reluctant to provide seed funding to unproven businesses.

Government spending on nanotechnology on the rise to promote infrastructure development

The government has been at the forefront of promoting nanotechnology industry in India through its three major funding agencies, namely Department of Science and Technology (DST, ), Department of Scientific and Industrial Research (DSIR, ), and Department of Biotechnology (DBT ). DST launched the Nano Science and Technology Initiative (NSTI) in 2001 under the leadership of Prof. C. N. R. Rao. Its aim is to make India a major player in this sector, and provided a total of $15 million for nanotechnology over 5 years. The NSTI funded about 100 research projects, and provided funding for setting up 10 core groups in nano science, 6 centres of nanotechnology, and one of computational materials science at different institutions across India. DST remains by far the largest funding agency. Government spending in nanotechnology through all its funding agencies amounted to less than $20 million in 2003/04 out of total R&D expenditure of about $3.03 billion (0.8% of GNP of India). According to government figures, the government has spent approximately $50 million over the past five years to promote R&D in the area of nanotechnology.

R&D activity in India is concentrated at the top 20 premier institutions like Indian Institute of Science, various Indian Institute of Technology, and universities like Anna University, University of Delhi. Defense organizations like Defense Research and Development Organization (DRDO) are also active contributors to R&D output from the country. These organizations will be profiled in greater detail in these columns. These institutes focus on basic research and include following research areas: synthesis of nanomaterials and nanocomposites, thin films processing and characterization, nano-sensors, nano-biotechnology, and superconductivity, micro- and nano-fabrication.

However, India's nanoscience and technology funding and policies are in their infancy. The fact that the latest R&D statistics released by DST make no exclusive reference to this sector makes it clear that it has not emerged as a major area of research in India, despite the emphasis placed on the industry by the President of India himself. One of the major barriers to growth of nanotechnology industry in India is lack of capital and nanotechnology infrastructure. The government has set up special funds to develop facilities and infrastructure to conduct nanotechnology research in various institutions. Indian Institute of Sciences, Bangalore has set up a joint research initiative involving 40 faculty across various department to provide shared access to world class infrastructure. Indian Institute of Technology, Bombay is drawing up plans to set up a nano-fabrication facility that is accessible to all researchers in the country.

Technical skills available aplenty, capital and managers at a premium

India offers a large and growing market for nanotechnology enabled products, fuelling investment in a diverse range of technologies for product development and improvement. This is coupled with availability of low cost, young technical talent in the country and experienced scientists returning from west. This had led to establishment of competent research groups at various research institutes working on futuristic products and technologies. Growing awareness and emphasize on intellectual property related issues has resulted in growing number of patent applications and simplified the technology transfer mechanism.

As R&D activities rise in the country, shortage of experienced techno-commercial managers is increasingly being felt across industries. This is especially true for an interdisciplinary field like nanotechnology, and lack of competent product and program management, marketing, sales, and distribution skills may turn out to be major weakness for the Indian industries. Nanotechnology start ups looking to hire these talents face stiff competition from cash rich industries, which themselves are experiencing major shortages of experienced professionals with business skills. Nanotechnology start ups are further disadvantaged when compared to similar companies from other sectors like IT or services due to high risk that is inherent to unproven technologies and long gestation period during product development and commercialization.

Potential to become a major R&D hub and service provider

In an effort to exploit the advantages offered by India, large multinational companies like General Electric, General Motors, and IBM have set up captive R&D bases in India. Smaller companies too, like Nano-tex have plans to set up a R&D centre in the region to carry out research on nanoparticles for fabrics and textiles. The company has an existing tie-up with an Indian textile and garment manufacturer, Madura Garments. The company's management explains that the motivation for this step was to exploit technological skills available in the country and to forge closer ties with Indian customers.

Some other companies like Monad Nanotech have taken up agencies to market nanomaterials in the country, to exploit the market potential and skilled sales staff. Yashnanotech has tied up with Cientifica, a leading information and consultancy company, to offer market research, consultancy, and training services to Indian businesses venturing in this space. Hilaal Alam, CEO of Qtech Nanosystem, elaborates on this trend: "India has got (the) potential to become a service provider for (global) nanotechnology industry; but not a pipeline for new products. Majority of investment in India up till now has gone in services sector and into building a testing and characterization infrastructure." He laments the lack of coordinated efforts in building product development capabilities. Incidentally, Qtech Nanosystems which started operations in Bangalore, India, has shifted its corporate activities to Singapore and utilizes their base in India for manufacturing and QA.

An analysis of the geographical location of the nanotechnology companies reveals that Mumbai and Bangalore are emerging as favored destinations by the industry. These two locations offer differing advantages. Mumbai is preferred for its concentration of Indian industries and corporate houses. The IT and biotechnology hub of the country, Bangalore, offers access to superior technical talent. It is also the seat of Indian Institute of Science, the leading centre for nanotechnology research in the country. Convergence of IT, biotechnology, semiconductors, and nanotechnology industries in Bangalore is likely to throw up some of the most fascinating development in the coming years. Such confluence of most advanced technologies, coupled with the "entrepreneurial frenzy" gripping the region is most likely to propel Bangalore as a leading centre of nanotechnology research in the world.

Please send your feedback, ideas, and suggestions to Vivek Srivastava at .

Vivek hold a Ph. D. in materials science and has published over a dozen papers in international journals and contributed to international conferences and seminars. He has interests in commercialization of nanotechnology & new ventures with innovative business models to exploit the advantages India offers. He consults existing businesses to grow and expand in new technology areas, and serves as mentor to budding entrepreneurs. His current research interest are "severe plastic deformation methods for production of bulk nanomaterials" and "Role of industry dynamics on making R&D funding decisions".

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