An anniversary is a celebration of the past and a time to think about the future.

Coming from industry, the issue of industry-academia interaction is of abiding interest to me. As an alumnus of this University, as someone who is involved with running of educational institutions, I have looked at the issue from the other side of the table too.

The issue of industry-academia relationship has gained a sense of immediacy because we now live in a global economy. There are no assured markets for any one in the world. There is a constant struggle to compete, which means that anyone running a business has to constantly upgrade his offerings and productivity. This is done largely by the employees of the company. So, their quality is central to a company's competitiveness.

In turn, the competitiveness of companies determines the prosperity of not only their employees and shareholders, but of the society as a whole. Today no one in the private sector can assure any one of a job. It has to be earned all the time and the key thing to ensure employment is employability, the continuous upgradation of one's skills, capabilities and output.

Learning, an important value in its own right, has now become an economic necessity. Life long for that matter. It is a development that all of us should welcome.

Thus, a country's educational system is central to its competitiveness. Of the 9 parameters used by the World Economic Forum, Geneva to judge an economy's competitiveness, 5 are connected to the quality and quantity of its education system.

This means not only the skill sets that students possess on graduating but also the attitude sets that are inculcated in the process of their learning. Also, capabilities that arise from the interaction of skills and attitudes in performing tasks successfully, are important.

On the whole, higher education in India has done extremely well in training people. That we are the 11th largest exporter of services in the world, when we are the 29th largest exporter of goods, says it starkly enough. I believe it also has to do with the tremendous support that Indian parents provide their wards for their education. That there are concerns in the West about the threat from Indian service exports or being Bangalored, speaks of the strength of our human resources. The IITs especially, have become a global brand. If any proof was needed that it is the quality of human capital that determines the economic performance of a country, then it is India. We have to leverage our young demographic profile to sustain and enhance this advantage. How our education system performs is critical to this process.

In my talk this evening, I shall refer to two aspects of Academia-Industry interaction. One, the ability of academia to meet the requirement of industry for trained manpower. Second, the co-operation between academia and industry in finding solutions, even ideas that may lead to solutions, to issues facing industry. Generally, it is the latter that is considered academia-industry interaction. I believe, however, that, at the present stage of development of our education system and our industry, it is the former, more basic question of education, including continuing education, that is an equally important aspect of academia-industry interaction. Only when we successfully tackle it will we be in a position to move to the more complex area of cooperation in idea generation and problem solving, which is generally termed R&D.

I belong to the positive realist school. I believe that accurate self-critics are secure in times of strain.

First, let me outline my opinion, a layman's opinion, of the state of our higher education system and its adequacy in meeting the manpower requirements of our industry. Second, the state of Indian industry. Third, the link between academia and industry in the developed world. Based on these one can try and develop a concept of industry-academia interaction suited to our needs and circumstances.

In my view, there are five critical weaknesses in our education system. First, is the declining quality of our teachers. Second, we are allowing far too many disinterested students into higher education. We should only admit students with, say, at least a second class to colleges and universities. Third, our education system lacks vocational focus and opportunities. Fourth, we have too little of practical work to internalise the overdose of theory and fifth, very little teamwork. All study and its evaluation is based on individual effort and performance.

In an annual ranking of the top 200 universities in the world by the respected “The Times Higher Education” we have only 3 institutions, IITs, IIMs and JNU. Of these only JNU is a university. Tiny Israel has 3 universities in this list and China 5. This should make us sit up and do some soul searching. Perhaps, the governance of our universities and the disconnect between research and teaching, especially in the sciences, are key reasons for this sorry situation.

If we compare MIT in the US to an IIT in our country one is surprised that, even without committed government funding, only 20% of MIT’s income comes from fees, compared to 10% for the IITs. The IITs get over 80-85% of their resources from the government and earn around 5-10%. In the case of MIT, 40% comes from income from research projects and technology licensing and 40% from endowments & investment income from alumni & industry. The pattern of data for other institutions, e.g. Stanford, is similar.

This means a tremendous responsibility on the faculty and therefore my concern about their quality. Is the faculty of an Indian University capable of taking on such a responsibility? Are Indian alumni willing to share the responsibility of providing for their alma mater?

I believe that a government controlled system has distorted our perspectives. The responsibility for education is ultimately that of our society. We possibly realised and discharged this responsibility better in pre-Independence times than after that.

We have also seen a phenomenal proliferation of institutions of higher learning, in numbers, geographical spread, variety. This has been spurred by entry of private institutions in education.

I believe we have adequate quantity but not enough quality. Various estimates suggest that even in professional courses like engineering, less than 25% of the graduates are really employable.

In industry today quality is a non-negotiable requirement. There is no market for poor quality, except as scrap.

If anything worries industry, it is this systemic devaluation of quality in the education system. If a large group of teachers are not there on the basis of quality, nor a large group of students, then how can we get quality output?

I believe that some of the measures needed to improve the quality of education in our country are:

1. Greater freedom to set up and manage educational institutions, including to reputed foreign educational institutions.
2. Regular updation of curricula in consultation with industry.
3. Improved remuneration to faculty based on performance. For example, as in the US, faculty compensation should partly be linked to research funding obtained by a faculty, so that there is an incentive and reward for doing research.
4. Reservation, whether for admissions or jobs, should not be absolute but relative, with grace marks of a maximum of say 20% being accorded.
5. Governance structures in the Universities must be altered to give them academic freedom and rid them of the current mediocracy based on false notions of democracy.and
6. Corporates and individual tax payers should be allowed to pay a portion of their income tax, say 10%, directly to government run educational institutions of their choice, in lieu of paying it to the government. A portion of these funds should be treated as additional funding and existing government funding should not be reduced. This would provide a tremendous boost to well run institutions as well as an incentive to them to do better.

I also believe that the model of industrial research followed by us has not yielded the desired results. We decided that specialized labs would do industrial research. The budget of CSIR of over Rs. 1000 Crs annually exceeds the research spending of all the Universities put together. But even after 40 years and even under the able leadership of an outstanding scientist and manager like Dr Mashelkar, only 25% of the earnings of CSIR labs come from outside, 75% comes from government grants. Also, they have largely become bureaucratic places. The world over, the Universities provide a much more lively environment for research because of their academic environment and the stimulating presence of young people. We should slowly close down government labs that do not earn their keep and divert that funding to the Universities. But, only after changes in governance structures of Universities have been made. Otherwise we will continue to throw hard earned tax payers money down the drain.

I have spoken enough about our education system, let me now turn to our industry.

Indian industry in 2006 is fundamentally different from what it was till 1991. Today, it competes successfully with global players because most major world players are present in our markets. Its exports are beginning to be significant and have been increasing faster than domestic sales. It is now investing more in taking over companies abroad than is spent by foreign companies in taking over companies in India. During 9 months of this year Indian companies have spent Rs. 20,000 Crores in overseas acquisitions.

Spending on R&D by Indian companies in some sectors , though still low, is now becoming comparable to their competitors abroad. The encouraging thing in the manufacturing sector is that its not just the newer companies, but many of the older companies too have done well. This is because companies have restructured in response to the altered operating environment which has become highly competitive.

To survive, let alone prosper, Indian companies need globally competitive manpower. The gap between products and technologies of Global and Indian companies has narrowed considerably. Constant innovation, upgradation, productivity and quality improvement are now the life-blood of Indian industry.

A great deal of the still existing gap is being bridged through judicious purchase of foreign technology, but internal R&D capabilities have matured rapidly. Between 1990-91 and 2004-05 R&D spending by Indian industry grew eight fold.

Now I will look at the situation in the developed world, compare it with ours and then, depending on our priorities, evolve a viewpoint.

If we take R&D activity as an indicator of industry-academia interaction then let us see what the numbers say about the difference in the situation of the US and India. The US spends 2.5% of its GDP on R&D. We spend 1%. But industry accounts for 71% of R&D spending in the US compared to 25% in India. This is a huge difference and accounts for much of the difference in what kind of R&D gets done and with what end results.

In the US, 19% of the R&D spending is on basic research, 21% on Applied research and 60% on development. In our case 18% is on basic research, 40% on applied and 33% on development. This is natural. When R&D is done in industry its link to the market is clear and therefore it is development oriented. When its done in the Govt system the link to the market is weaker.

In the US, 60% of the basic research is done in the Universities , only 17% in industry , 14% in Non-profit research institutions and 8% in the government. This basic research in Universities is funded primarily by the government. Only 3% of it is funded by industry.

In the US, 64% of applied research and 90% of development is done by industry.

Also, in our case a great deal of R&D spend of the government, over 80%, is on defence, atomic energy and space.

The takeaway from this brief review is that the fertile ground for Industry-Academia interaction may be the middle ground of applied research, and even development, with a longer time horizon that suits the temperament and time constraints of professors, but where industry can see some clear tangible results in the foreseeable future.

Knowledge and business are intimately linked. Have always been. The closed economy that we gave ourselves till 1991 obscured this relationship. However, if one examines the winners from even the old economy companies in the country, one will find that these companies never quite forgot this relationship. In their own way, even if inadequately, they pursued it.

The way academia looks at knowledge and the way industry looks at it differ. Industry looks for knowledge to make and sell things. Make new things, make them better, make them more efficiently. It however recognises that behind technology lies science. And science works in a different rhythm from technology.

I believe both industry and academia need to learn and change to make the interaction productive for both sides. Doing always improves our learning. It is the best way to start the virtuous spiral of improvement.

It is obviously in the enlightened self-interest of educational institutions to partner industry. Interaction not only brings in money, but, I believe more importantly, keeps the faculty updated and thereby improves the quality of their teaching. Whatever the subject area, faculty who engage in research, by and large, teach better. But, a substantial change is required in the mindsets of our academia.

Educational institutions in the developed world see themselves as surviving and thriving when they attract the best teaching and student talent and when they can make themselves useful to industry. Next week a large no. of European Universities are in Delhi for A Higher Education Fair. Universities in even a small country like Austria have "a global plan of international cooperation with the Austrian industry". I know because they have sought an appointment with me. Are our Universities in that mould ?

Let me give you an example of the kind of attitude and capability that is required of academic institutions to have a productive relationship with industry. There is an Indian wind mill company which did not go in for a joint venture with a foreign company but has developed very good links with two European universities, one for blades and another for gear boxes. The company is confident that the universities can deliver better concepts and in time, because of the quality of their people and the specialisation that exists in the universities in these areas. In dealing with our institutions one often finds this kind of institutional specialisation and commitment to delivery wanting.

It is also in the enlightened self-interest of business to support educational institutions. Because, the people that will produce the intellectual capital for industry are created in these institutions. Also, new ideas and concepts, and the freedom to pursue them, happen more in an academic environment.

Also, as sources of technology purchase reduce, IPR regimes get restrictive and the variety of intellectual inputs needed increase, Indian industry will need to engage with academia to strengthen the institutions in the first place and then involve them in industry's R&D activities.

There are a large no. of Indians manning the US universities. Sometimes, one feels that they are running their higher education system. We must create conditions for them to engage with our higher education system. They have the capability and, more importantly, the mindset to make academia useful to industry. When I was Chairman of the Board of Governors of IIT Bombay, we persuaded the govt. to change rules such that even if the faculty abroad had taken up US citizenship they could be appointed on our faculty on a full time basis.

I believe a start can be made by allowing our faculty to take one year sabbaticals in R&D units of companies. They will understand the logic of industrial R&D, and industry would have the opportunity to assess the value of the better power of conceptualization and idea generation that academicians have.

Consultancy & licensing fees for ideas have to be institutionally facilitated with structures like Technology Parks and Incubation centres like IIT, Bombay's SINE, Society for Innovation and Entrepreneurship. But they are less important and no substitute for the quality of faculty and the quality of their output. It is the practice of a meritocracy and cultures of excellence, as measured by delivery of output, that are more important than obeisance to fashions of the day.

I believe, at least hope, that in the years to come this relationship will strengthen and deepen. I hope Mumbai University will be a path breaker in this field. Mumbai University's Institute of Chemical Technology has long been known for its outstanding contribution to industry.

The future, as an eminent American philosopher, John Schaar, put so well, and I quote "is not the result of choices among alternative paths offered by the present, but a place that is created- created first in mind and will, created next in activity. The future is not some place we are going to, but one we are creating. The paths to it are not found but made, and the activity of making them, changes both the maker and the destination". We, who are in a position to influence & fashion choices, have a responsibility for better outcomes. We have to envisage and create the future.

In today's knowledge driven economic environment, national educational strength is the basis for a nation's economic and social prosperity. We must continually strengthen our educational institutions. Industry-academia interaction can play an important role in this process. On behalf of Indian industry I can assure you that we will not be found wanting.

Thank you, Sir.