India’s ranking improves in innovation index

India has jumped five places to improve its position from 57th last year to 52nd this year in the Global Innovation Index (GII).

The rankings are based on 80 indicators, from traditional measurements such as research and development (R&D) investments and international patent and trademark applications to newer indicators such as mobile app creation and high-tech exports.

The Indian government uses the GII to strengthen its policy framework for innovation at both the national and regional levels.

2019 rankings

1. Switzerland (No 1 in 2018)

2. Sweden (3)

3. US (6)

4. The Netherlands (2)

5. UK (4)

6. Finland (7)

7. Denmark (8)

8. Singapore (5)

9. Germany (9)

10. Israel (11)

Key findings

* The global landscape of science, innovation and technology has undergone important shifts over the past decades. Middle-income economies, especially in Asia, are increasingly contributing to global R&D and international patenting rates via the WIPO’s International Patent System.

* The GII shows that public R&D expenditures - particularly in some high-income economies - are growing slowly or not at all. This raises concerns given the public sector’s central role in funding basic R&D and blue-sky research, which are key to future innovations.

* Increased protectionism poses risks. If left uncontained, it will lead to a slowdown of growth in innovation productivity and diffusion across the world.

* Innovation inputs and outputs are still concentrated in very few economies. Divides also persist in how effectively economies obtain return on their innovation investments. Some economies achieve more with less.

* Most top science and technology clusters are in the US, China and Germany, while Brazil, India, Iran, Russia and Turkey feature in the top 100 list. The top five clusters are Tokyo-Yokohama (Japan), Shenzhen-Hong Kong (China), Seoul (South Korea), Beijing (China) and San Jose-San Francisco (US).

India-specific findings

* India’s rank has improved from 57th position in 2018 to 52nd position in 2019.

* In terms of innovation and newly emerging technologies, India has been performing well and has improved its position by 29 places in the global index since 2015.

* India was ranked 81st in 2015, which rose to 66 in 2016, 60 in 2017 and 57 in 2018.

* India continues to be the most innovative economy in central and southern Asia.

Global Innovation Index

* The GII is an annual ranking of countries by their capacity for, and success in, innovation.

* It is published by Cornell University, INSEAD and the World Intellectual Property Organisation in partnership with other organisations and institutions and is based on both subjective and objective data derived from several sources, including the International Telecommunication Union, the World Bank and the World Economic Forum.

* The index was started in 2007 by INSEAD and World Business, a British magazine. The GII is commonly used by corporate and government officials to compare countries by their level of innovation.

* The GII is computed by taking a simple average of scores in two sub-indices, the Innovation Input Index and Innovation Output Index, which are composed of five and two pillars, respectively. Each of these pillars describe an attribute of innovation, and comprise up to five indicators, and their score is calculated by the weighted average method.

LS nod for Companies Amendment Bill

The Lok Sabha has passed the Companies (Amendment) Bill, 2019. It is aimed at tightening corporate social responsibility (CSR) compliance and reducing the load of cases in the National Company Law Tribunal (NCLT).

Highlights

Issuance of dematerialised shares: Under the Companies Act, 2013, certain classes of public companies are required to issue shares in dematerialised form only. The Bill states this may be prescribed for other classes of unlisted companies as well.

Re-categorisation of certain offences: The 2013 Act contains 81 compoundable offences punishable with a fine or imprisonment or both. These offences are heard by courts.

The Bill re-categorises 16 of these offences as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties instead.

These offences include issuance of shares at a discount and failure to file annual returns. The Bill amends penalties for some other offences.

CSR: Under the Act, if companies that have to provide for CSR do not fully spent the funds, they must disclose the reasons for non-spending in their annual report.

Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.

However, if the CSR funds are committed to certain ongoing projects, then the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year, and spent within three years.

Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act. Any violation may attract a fine between Rs 50,000 and Rs 25 lakh and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25 lakh or both.

Debarring auditors: Under the Act, the National Financial Reporting Authority can debar a member or firm from practising as a chartered accountant for a period between six months to 10 years for proven misconduct.

The Bill amends the punishment to provide for debarment from appointment as an auditor or internal auditor of a company, or performing a company’s valuation, for a period between six months to 10 years.

Commencement of business: The Bill states that a company may not commence business unless it…

* Files a declaration within 180 days of incorporation, confirming that every subscriber to the memorandum of the company has paid for the shares agreed to be taken by him, and

* Files a verification of its registered address with the Register of Companies (RoC) within 30 days of incorporation.  If it fails to comply with these provisions and is found not to be carrying out business, its name of the company may be removed from the RoC.

Registration of charges: The Act requires companies to register charges on their property within 30 days of creation of charge, extendable up to 300 days with the permission of the RoC.

The Bill changes the deadline to 60 days (extendable by 60 days).

Change in approving authority: Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the NCLT. Similarly, any alteration in the incorporation document of a public company which has the effect of converting it to a private company, has to be approved by the NCLT. Under the Bill, these powers have been transferred to the central government.

Compounding: Under the Act, a regional director can compound (settle) offences with a penalty of up to Rs 5 lakh. The Bill increases this ceiling to Rs 25 lakh.

Bar on holding office: Under the Act, the central government or certain shareholders can apply to the NCLT for relief against mismanagement of the affairs of the company.

The Bill states that in such a complaint, the government may also make a case against an officer of the company on the ground that he is not fit to hold office for reasons such as fraud or negligence. If the NCLT passes an order against the officer, he will not be eligible to hold office in any company for five years.

Beneficial ownership: If a person holds beneficial interest of at least 25 per cent shares in a company or exercises significant influence or control over the company, he is required to make a declaration of his interest.  The Bill requires every company to take steps to identify an individual who is a significant beneficial owner and require their compliance under the Act.