Karnataka First On India Innovation Index Due To Rise In Funding

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The goal of the report was to promote and appreciate sub-ecosystems that are creating jobs and livelihood opportunities with indigeneity at creativity level

Karnataka has been the top state receiving over 45% of the total FDI in the country and raising over $21 Bn in startup funding in 2021

Apart from investment, Karnataka did not top in any other parameter, but was among the best performers, earning it the top spot in the overall rankings

NITI Aayog’s India Innovation Index 2021 measures the degree of innovation made in the country over the past year. The report saw Karnataka topping the Major States category followed by Telangana and surprisingly enough, Haryana.

NITI Aayog member Dr VK Saraswat stated that innovation is the key to sustainable and inclusive growth and helps solve the biggest challenges of our times – bringing millions out of poverty, generating livelihood opportunities, and paving the way for an Aatmanirbhar Bharat.

Thus, naturally, the parameters that ranked Karnataka among the top states enabling innovation included human capital, investment, knowledge workers, business environment and safety, legal environment and knowledge output & diffusion.

Karnataka’s capital Bengaluru or the silicon valley of India has been the poster city for the startup ecosystem. The state had thus seen a lot of money inflow. Karnataka accounted for close to 45% of total FDI (INR 2.29 Lakh Cr) in India between April 2021 and September 2021 alone.

Bengaluru topped Collier Research’s Tech Jewels 2019 ranking in Asia; Karnataka was the top performer under the National State Startup Ranking Framework in 2021. 

Now, after raising $21.3 Bn+ in 2021 in VC funding, the state also secured the top spot in the rankings for the most innovative business ecosystem in the country. Bengaluru-based startups have also made a global mark valuing the ecosystem at roughly $105 Bn and the top among venture capital investments hubs in 2022.

Consequently, the Karnataka government has set a target of contributing $300 Bn to the country’s $1 Bn digital economy – the highest among all the states.

Suggestions To Improve Innovation In The Country

With the innovation index, the government monitors select global indices through the Global Indices to drive Reform and Growth (GIRG) mechanism – for which the NITI Aayog is the nodal organisation. 

Thus, apart from investment, Karnataka did not top any other parameters, but was among the best performers, earning it the top spot in the overall rankings. Further along these parameters, in the NE and hill states, Manipur took the lead, followed by Uttarakhand and Meghalaya. Chandigarh managed to edge Delhi among the UTs and city states category.

The index, made by using 50 indicators for enablers and 16 indicators for performers, takes these parameters and makes seven pillars across which it measures the innovation ecosystem across states. The index matches its methodology with the Global Innovation Index (GII) – where India ranked 46th in 2021. 

The current NITI Aayog report also noted that states with a higher Gross State Domestic Product (GSDP) tended to score a higher score on the list.

The score means that startups higher up along the scale, can spend more on facilitating their ecosystem and bringing investment to the country – thus, Karnataka achieved the top spot in this metric. 

Now, the report suggests that India’s R&D ecosystem needs a complete overhaul, and should contribute 2% of the GDP spending. This will help the nation achieve the $5 Tn digital economy goal for policymakers and further influence its innovative footprint across the globe. 

Other suggestions by NITI Aayog included growing human (knowledge) capital, improving our education systems and facilitating the creation of patent-worthy goods and services and promoting competitive federalism.



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