Limits of funding: on private sector research funding

Private sector research funding is boosted mostly by partnerships among companies

February 24, 2020 12:02 am | Updated 12:02 am IST

That research and development in India is inadequate, in terms of money, personnel and ambition, isn’t news. The founders of independent India sought to base its development on science and technology. To this end, even at the expense of universal, free primary education, the country privileged esoteric research such as atomic energy and space over industrial technology, and tertiary research institutions — the IITs — over the spread of technical education in local languages. As a strategy with successes and setbacks, this also saw, as historians have noted, Indian R&D remain beholden to the government. Publicly-funded research has always been encouraged to reinvent the wheel and customise technology to Indian realities, whereas private companies and industrial firms have rarely been incentivised to develop their own intellectual property. It is only after the turn of the millennium that policymakers have pondered on coaxing the private sector to invest more in R&D. Public institutions contribute the lion’s share of R&D investment. In 2004-05, the private sector accounted for 28% of research spend; it was40% in 2016-17. In most advanced economies, private R&D accounts for the bulk of investment in R&D. Moreover, relative to its income, India underspends on R&D compared to what the U.S. and China did when it had income levels comparable to India’s now. Given this history, the Department of Science and Technology is mooting a fund that will match the private contributions in R&D. A ₹40-crore target is on the anvil and the idea is that the private sector — Indian firms and foreign companies with Indian subsidiaries — would fund scientists in key academic institutions.

This is not the first time that the government has tried to get private sector money into R&D. When ‘Startup India’ and ‘Make in India’ were the buzzwords in the early years of the Modi government, there were attempts to have venture capitalists and government departments involved in scientific research, to pool money and invest in technology start-ups. But, unfortunately, this has not resulted in investment in creating intellectual property. Too much of India’s research investment is expended on a small pool of scientists in a limited number of institutions. The private sector has extremely limited capacity to absorb scientists and a limited risk-appetite to invest in futuristic technology. Private research funding is also boosted more by partnerships among companies rather than by centrally-funded research programmes. While private funding is increasing, it still has not reached a level where major central funding can make a significant impact. Many CSIR laboratories have had a long history of collaborating with companies to develop and transfer technology to industry, but here too, restrictions on how intellectual property and licence fees can be shared abound. Unless there is greater participation and cooperation at smaller levels among companies and government, central schemes may not be fruitful.

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