Abstract: This paper presents a detailed overview of the innovation policy framework in India in order to assess its role in innovations and enterprise development in the Indian industry. Over the decades, India’s innovation strategies have been guided by the S&T policy statements, while industrial policy resolutions/statements have given direction to the development of manufacturing enterprises. These twin processes have tried to ensure that India is able to develop a sufficiently robust manufacturing base and at the same time build a sound S&T infrastructure and create a high-skilled manpower base. We distinguish between eras of closed and liberalised economy in India and account for recent policy overtures. We closely examine the Indian scenario with respect to technological capability of its industry and draw suggestive international comparisons. We devote substantial attention to the emerging issue of innovations in the SME sector in India and discuss in detail technological interventions in two traditional industry clusters in India. Finally, we highlight the existing bottlenecks in India’s national innovation system. In this paper we note that the existing policy paradigm does not draw upon immediate innovation challenges that may be specific to India, particularly when developmental priorities are overwhelming. We suggest that while, economic policies should ensure sustained demand for innovations, innovation policies in India at this juncture should cater to two definite goals. First, streamline availability of broad-based skills to seize opportunities of specialization, industrial development and knowledge economy. And, second, achieve frontier R&D focused on pro-poor innovations, niche knowledge and green technologies.
Keywords: Innovation Policy, India, Enterprise Development, Technological Competitiveness, Clusters