India, Oct. 31 -- The latest Global Innovation Index placed India 38th. The commentariat will repeat what it says every year: Our R&D expenditure is only ~0.6% of GDP, against China's ~2.7% and Korea's ~5%; only 41% of our R&D comes from the private sector, compared to 70-80% in peer economies; and we have no patience with failure.

All these are true, but are mere symptoms. The root cause is the handicap our policy ecosystem imposes on the ease and cost of doing business. Even if an Indian firm's R&D gives it a better product, it cannot manufacture the product cheaply and quickly enough to beat global competition. Without the ability to win in world markets, the returns on R&D investment are too low. Thus, private R&D investment in India...