A focus on NEX-LABS Best Practices in Italy: highlights on the importance of building collaborative ecosystems to support innovation in Water, Energy and Food.
NEX-LABS Best Practices in the Water, Energy and Food (WEF) highlight the importance of Strategic Orientation, Funding R&D and Innovation, Entrepreneurial and Collaborative Ecosystem as conditions to ensure the future growth of our Mediterranean eco-system.
During the past months, NEX-LABS project partner countries have worked with an incredible commitment to defining a list of their country-specific best practices which are helpful to build a resilient, sustainable, and inclusive Mediterranean ecosystem for water, energy and food security.
Best practices are a fundamental ingredient to building a catalogue which can be useful for policy building, as well as for improved local entrepreneurship and community resilience.
The survey conducted in Italy, together with research papers, was helpful in defining 3 features with 14 actions of the country’s sustainable development in the nexus of water, energy, and food:
- Strategic Orientation
- Funding R&D and Innovation
- Entrepreneurial and Collaborative Ecosystem
The survey demonstrated that fostering innovation is a true engine for competitiveness. A way to improve Italy’s regional competitiveness is through the settlement of clusters and company hubs, involving also local institutions. So as for the other NEX-LABS countries also for Italy building public-private partnerships is key to ensure sustainable development.
At regional level, according to region-specific assets, there are sector-specific tables, where partners engage into political and economic discussion promoting for example circular economy best practices. In 2012, precisely in line with this spirit, the MIUR - Ministry of Education, University and Research - issued a first call for tenders for the development and strengthening of National Technological Clusters. 8 permanent Technological Clusters were selected and 30 projects financed for a value of around 300 million euro:
- Green chemistry
- Smart factory
- Means and systems for land and sea surface mobility
- Life Sciences
- Technologies for living environments
- Technologies for Smart Communities
With the Decree of 26 July 2017, the Miur created another four National Technological Clusters:
- Cultural heritage
- Design, creativity and Made in Italy
- Economy of the Sea
The main objective of the Technological Clusters is to create a close link between the industrial system, the research system and national and regional institutions, in support of the national strategic lines of research, development and training of human capital. Through permanent consultation with all the players, the MIUR has the possibility of being supported and stimulated in the development of the strategic lines of research and innovation on which to base the guidelines and investments for the coming years. The Clusters want to be a way to activate Italian excellence in research and innovation with a view to intelligent specialization of the country system to compete in Europe and in the world. An in depth paper is available in Italian a this link
In addition to all of the above, Italy has invested in the creation of a National Industry 4.0 Innovation Programme which boosts the adoption of new technology in the productive and industrial sectors. The programme was launched in late 2016, Industria 4.0 is Italy’s national strategy for digitising industry. It encompasses a wide range of policy measures to spur both domestic and international investment, and boost innovation-driven economic growth.
As a result of Industria 4.0, Italy’s fiscal framework for innovative companies is now one of the most attractive in the world (Digital Tax Index 2017). Its tax incentives are designed to be automatically available to any type of company, reducing uncertainty and red tape. Alongside this, several other industrial policy measures are provided to support a diverse range of companies, ranging from fledgling startups to established multinational corporations.
The cornerstones of the Industria 4.0 plan are the 5 fiscal measures described below:
1. Tax incentives for investments in innovative startups and SMEs
Investment by both individuals and legal entities towards innovative startups and innovative SMEs benefit from a substantial break on Italian income tax (IRPEF allowance for individuals, IRES deduction for corporations). The benefit amounts to 30% of the invested sum for both categories, up to €1M yearly for individuals, and to €1,8M for companies. The incentive also applies to investments in Italian venture capital funds, CIUs, and other entities that predominantly invest in innovative startups and SMEs.
Entails a 40% increase in the ordinary depreciation deduction for investments in new industrial machinery, meaning that acquisition costs are raised by an equivalent share for accounting purposes. As assets are subject to fiscal depreciation over the years, this leads to a substantial, long-lasting reduction in taxable income, and thus of the effective tax rate.
Similar to the former, hyper-depreciation consists of a 150% increase in the ordinary depreciation deduction. This massive increase in the acquisition cost calculated for accounting purposes results in a large reduction in the tax burden over several years.
This incentive applies to selected industrial equipment of a “Industry 4.0” character (e.g. machinery that can exchange information with other systems through the Internet of Things). Its goal is to encourage firms to invest in the digital transformation of their production processes and supply chains.
4. Tax credit for Research and Development
Companies that increase their R&D expenditure in the 2017-2020 period benefit from a 50% tax credit on their additional expenses (incremental credit), with an annual ceiling of €20M. The measure applies to basic research, industrial research and experimental development – including personnel expenditure, research agreements with other entities – and IP costs. Moreover, the tax credit can be used to offset a wide range of taxes and contributions, even if companies report losses.
5. Patent Box
It is a special fiscal regime consisting of a 50% reduction in corporate tax on income deriving from direct and indirect use of intangible assets (i.e. industrial patent rights, industrial design and models, know-how and copyrighted software). In order to determine the benefit, there must be a direct link between R&D activities, qualified IP and the resulting income (the so-called “nexus approach”). Except for a few cases, the incentive is conditional on a preliminary tax ruling from the Italian Revenue Agency (click HERE for more info).
2. Funding R&D and Innovation
Italy has invested in the creation of platforms which support R&D and Innovation, some of them are listed and described below.
ENEA Tech and Biomedical, is a private foundation supervised by the Italian Ministry of Economic Development. The aim of the foundation is to promote investments and initiatives in the fields of scientific research, economic development and technology transfer in favour of Italian start-ups and innovative SMEs that operate in the following macro-areas: green and circular economy, information technology, agri-tech and deep-tech.
AREA Science Park is a public national research organization that promotes the development of innovation processes. For 40 years, its mission has been to boost connections between research and enterprise, public administration and the private sector, supporting national and international initiatives and fostering territorial development. Area Science Park has four main lines of business: Science & Technology park, Business Generation, Business Enhancement, Science & Technology platforms.
Fondo Nazionale Innovazione - CDP Venture Capital – Fondo Nazionale Innovazione aims to make Venture Capital a strategic pillar to Italy's economic growth and innovation, creating the conditions for a comprehensive and sustainable growth of the Italian Venture Capital ecosystem. Four objectives: (1) to expand both direct and indirect investments, overseeing existing funds while encouraging the emergence of new funds to support startups at all stages of their growth cycle. (2) To develop the community by bringing together companies, investors and startups for exchange of ideas and pursue new opportunities. (3) Foster the evolution of the Venture Capital system by working in synergy with national agencies and institutions that support startups and by creating a network with key players at the international level. (4) Foster the growth of the Italian market by attracting new national and international investors to the Venture Capital asset class by promoting a new culture of Venture Capital and entrepreneurship in Italy. CDP venture capital is 70% owned by CDP equity and 30% by Invitalia.
Besides all privately and publicly owned institutions mentioned above, Italy counts approximately 100 universities with a specific research and development offer (69 State owned, 19 private and 11 online and 15 public research organizations responding to a wide range of topics.
3. Entrepreneurial and Collaborative Ecosystem
Italy is committed to building a startup ecosystem focusing on food, agri-food, water and energy. Startups are often a result of spin-offs born from the collaboration among universities and technology parks. Clusters of universities, research centres and centres of excellence are gaining momentum also thanks to financing opportunities/SMEs or potential entrepreneurs with grants/loans by National Institutions such as Invitalia.
In September 2022, Invitalia launched Bravo Innovation Hub, a new acceleration program aimed at companies that offer innovative solutions in the agri-food chain, specific also for Southern-Italy. The program offers 41,500 euros to launch a business, a grant of 20,000 euros and training, mentorship and networking courses with international experts. The Bravo innovation Hub project, which has already been active for some years, is part of the Action Plan for the dissemination of entrepreneurship and innovation promoted by Invitalia and the Ministry of Economic Development as part of the PON Enterprises and Competitiveness 2014-2020. On 28 September 2022, Invitalia published a new call for tenders to entrust these services and identify the universities, companies, non-profit organizations and research centers that will launch 5 different acceleration programs in the year 2022-2023. The new tender is worth 1 million and 250,000 euros, a sum that will allow 10 start-ups to grow and become competitive on the market.
Some EU Mediterranean projects which support the generation of these ecosystems, and where Italy is of course one of the partner countries, is ENI CBC MED (to address climate change, pollution, youth unemployment and social inequality challenges and improve the lives of men and women across the region “Mediterranean Sea Basin Programme” the largest Cross-Border Cooperation (CBC) initiative implemented by the EU under the European Neighbourhood Instrument (ENI). Another interesting EU program is PRIMA (Partnership for Research and Innovation in the Mediterranean Area) as joint research programs help to establish structured and long-term partnerships. The initiative is characterized by an unprecedented focus on the Mediterranean, by the desire to reduce the fragmentation of existing initiatives and to promote innovation and research solutions and projects in three strategic thematic areas: management of water resources, sustainable agriculture; food and the food chain.
Other include bilateral agreements such as SMARTAGRIHUB between Italy and Malta
The following quote extract of a research paper highlights the importance of developing an innovation ecosystem and alternative financing also through crowdfunding. “ innovative startups—newly created and innovation-based enterprises—have come into the spotlight as key drivers of innovation within the agri-food system (Graziano, 2020). “ (…) “Currently, agri-food is the second most important manufacturing sector in Italy, and despite the current economic crisis, it boasts a positive performance. However, this requires innovation competence to be enhanced since it represents the main driver of growth productivity and competitiveness. In this context, improving regional networks and agri-food clusters is a way to enhance and/or trigger innovation competence (Bentivoglio and Giampietri, 2016) and achieve long-term sustainability, facing significant challenges such as over-exploitation of agricultural resources, excessive use of inputs and pollution (Poppe, 2014). On the one hand, the Italian agri-food sector represents an excellence thanks to its quality, food safety, cutting-edge technological innovation, sustainability, biodiversity and respect for tradition (Tiozzo et al., 2019). On the other hand, the Italian agri-food industry must face several challenges. The process of valorising typical productions involves different dimensions: the nutritional and hedonistic one up to the technological, service, safety, authentication, traceability and certification aspects of the products; implementation of enabling technologies, industrial biotechnologies and nanotechnologies, advanced materials and manufacturing systems. To preserve their competitiveness in digitalisation, internationalization and the improvement of skills, start-ups often rely on external (European Commission, COMSE, 2020) and alternative financing forms such as crowdfunding (Cillo et al., 2019).
According to the online magazine AGRIFOOD:TECH, Italy is 10th in Europe in attracting investments, however accelerators and enablers such as Plug and Play, Talent Garden and The Food Tech Accelerator are helping to improve the industry’s competitiveness and attractiveness. “Furthermore, the setting up of national funds that will strengthen the Agritech & Food of the Italian Investment Fund worth 700 million euros and the 2.8 billion euros from the Next Generation EU, represent an interesting boost for the Italian agri-food market. Let's not forget the PNRR which amounts to 191.5 billion euros and 59.33 billion are earmarked for the implementation of a green transition, aiming to strengthen venture capital startups in and revolutionize the agri-food system by aligning more closely with the United Nations Sustainable Development.”
Another supportive structure for the entrepreneurial and collaborative ecosystem offered in Italy are the Business Support Organisations (BSO). For example, once of them is Friuli Innovazione Research and Technology Transfer Centre, Italy – which support SMEs in their digital transformation. The latter participated in an Interreg project to boost BSOs and is partnering with 8 European countries. Click HERE for further insights.
Each BSO is generally part of a wider network, and also the Association of Mediterranean Chambers of Commerce (ASCAME gathering more than 300 chambers of commerce representing several private entities) are getting together to win EU funds to create BSOs networks specific for some topics. Once which was launched in February this year is ORGANIC Ecosystem a cross-border cooperation project developed in the framework of the ENI CBC MED programme, funded by the European Union, the aim of ORGANIC Ecosystem is to ensure that Mediterranean MSMEs operating in organic agriculture become more competitive and better integrated. The core goals of the project are food security, environmental sustainability, business alliances, innovation and the development of new markets and commercial opportunities.
The above is helpful to increase the collaboration between SMEs, large enterprises and research centres, and there is a significant increase of international collaboration activities.
BSOs work in cooperation with Digital Innovation Hubs (DIH) and Competence Centres. In Italy there are 72 DIH, across all the regions, many of them use the Italian Industry Network called Confindustria to help identify criticalities. DIHs support businesses, starting with digital maturity assessment, defining the roadmap for the digital transformation of business processes and assistance in the development of 4.0 projects; orientation towards the innovation ecosystem.
The competence centers are public-private partnerships whose task is to carry out guidance and training activities for companies on Industry 4.0 issues as well as support in the implementation of innovation, industrial research and experimental development projects aimed at the realization, by the user companies, in particular SMEs, of new products, processes or services (or their improvement) through advanced technologies in the Industry 4.0 field.
In 2018, the Italian Ministry of Enterprise and Made in Italy (MISE) selected 8 winning competence centres to deliver training and workshops to showcase the potential impact of investing in Industry 4.0. The funding will be increased in 2023, and the competence centres will stay in place until 2025, namely:
- CIM 4.0 - Competence Industry Manufacturing 4.0
- Made - Competence Center Industria 4.0
- BI-REX - Big data Innovation-Research EXcellence
- ARTES 4.0 – Industry 4.0 Competence Center on Advanced Robotics and enabling digital TEchnologies & Systems 4.0
- SMACT Competence Center
- MedITech Competence Center I 4.0
- START 4.0– Sicurezza e ottimizzazione delle Infrastrutture Strategiche Industria 4.0
- CYBER 4.0 – Cybersecurity Competence Center
In conclusion, the country is working to address several issues impacting our sustainable development, the entrepreneurial and collaborative ecosystem includes Universities, Competence Centers, Clusters, Test Labs/Industrial Player Centers/ICT Services, Research Centres; science parks and technology poles, Start-up Incubators, Fab Labs, Investors, Local Authorities – because as mentioned at the beginning of this article Italy does see innovation as the engine of competitiveness, and there are European funds which support such implementation.
For further research on Italy, please consult:
- Technological Clusters https://www.clusteralisei.it/wp-content/uploads/2015/02/CTN_Position-Paper-1.pdf
- “INDUSTRIA 4.0” ITALY’S NATIONAL PLAN FOR INDUSTRY https://www.mise.gov.it/images/stories/documenti/INDUSTRIA-40-NATIONAL%20PLAN_EN-def.pdf
- Research Paper Mara Del Baldo* 15 August 2022 When innovation rests on sustainability and food safety: Some experiences from Italian agri-food start-ups https://www.frontiersin.org/articles/10.3389/frsus.2022.889158/full
- Italian Competence Centres https://www.mise.gov.it/it/incentivi/centri-di-competenza-ad-alta-specializzazione
- ASCAME https://www.ascame.org/new/ascame-gathers-in-germany-the-mediterranean-stakeholders-of-organic-agriculture/
- Universities https://www.mur.gov.it/it/aree-tematiche/universita
- DIH https://preparatialfuturo.confindustria.it/digital-innovation-hub/cosa-sono/
- BSOs https://friulinnovazione.it/it/consulenza-e-supporto/progetti/progetti-internazionali/boost4-bso/
- Invitalia https://www.invitalia.it/chi-siamo/area-media/focus