| | The stellar performance of India’s information technology sector has been acclaimed
worldwide. Although India’s export success in IT is widely attributed to its human capital, it
is not clear whether this has also been accompanied by industry-wide innovation. This paper
explores the innovative behaviour of firms in the IT sector. Although substantial efforts have
been made over the past 50 years by the government in implementing various policy
measures, building institutions, and putting strong emphasis on higher education, there has
been a systemic failure to promote the emergence of networks of innovation. This, in turn,
has impeded the innovation performance of the IT industry. There is a need to direct
policy to address this systemic failure and bring in industry-wide innovation.
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