India’s R&D funding, breaking down the numbers

India’s technological and manufacturing aspirations hinge on a transformative shift in its R&D landscape

Updated - March 14, 2024 09:21 am IST

Published - March 14, 2024 12:16 am IST

‘Learning from the R&D ecosystem in other developed countries is ideal’

‘Learning from the R&D ecosystem in other developed countries is ideal’ | Photo Credit: Getty Images/iStockphoto

The announcement in the interim Budget for 2024-25, of a corpus of ₹1 lakh crore to bolster the research and innovation ecosystem within the country, has sparked enthusiasm within the scientific and research communities. The decision to rebrand the slogan, ‘Jai Jawan Jai Kisan’ (by Lal Bahadur Shastri) to ‘Jai Jawan, Jai Kisan, Jai Vigyan’ (A.B. Vajpayee) to now ‘Jai Jawan, Jai Kisan, Jai Vigyan, Jai Anusandhan’ (by the Prime Minister) is intended to reinforce the foundation of research and innovation for development. The significance of research and innovation cannot be overstated in fuelling economic growth, technological advancement, and global competitiveness. However, to fully realise the impact, it is crucial to assess the current research and development (R&D) funding landscape in India and its resulting output. This entails examining India’s comparatively lower R&D expenditure as a percentage of GDP alongside its noteworthy output in terms of patent grants, PhDs awarded, and publication outputs. Analysing the quality of this output is equally imperative in understanding the true implications of these initiatives.

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India’s R&D is witnessing significant growth, with a notable increase in Gross Expenditure on Research and Development (GERD) from ₹6,01,968 million in 2010-11 to ₹12,73,810 million in 2020-21. However, with research and development investment as a percentage of GDP standing at 0.64%, India falls behind major developed and emerging economies such as China (2.4%), Germany (3.1%), South Korea (4.8%) and the United States (3.5%).

Research output, innovation

Despite the comparatively lower share of GDP dedicated to R&D, India has emerged as a powerhouse in producing academic talent. Annually, India generates an impressive 40,813 PhDs and is in third place after the United States and China. This achievement reflects India’s commitment to fostering intellectual capital and contributing significantly to global research endeavours. Additionally, India’s research output remains substantial, ranking third globally, with over 3,00,000 publications in 2022, highlighting the nation’s robust research ecosystem and its commitment to advancing knowledge across diverse fields. India also demonstrates commendable performance in patent grants, securing the sixth position globally with 30,490 patents granted in 2022. While this figure is lower compared to the U.S. and China, it underscores India’s evolving innovation landscape and its potential for further growth in intellectual property creation.

In India, GERD is primarily driven by the government sector, including the central government (43.7%), State governments (6.7%), Higher Education Institutions (HEIs) (8.8%), and the public sector industry (4.4%), with the private sector industry contributing only 36.4% during 2020–21. Collaboration between the government, business enterprises and HEIs is essential to maximise the positive impact of science, technology, and innovation on economic growth and technological advancement.

Investment in R&D

According to the R&D statistics (2022-23) of the Department of Science and Technology, India’s total investment in R&D reached $17.2 billion in 2020-21. Within this sum, 54% ($9.4 billion) is allocated to the government sector and predominantly utilised by four key scientific agencies — the Defence Research and Development Organisation (30.7%), the Department of Space (18.4%), the Indian Council of Agricultural Research (12.4%), and the Department of Atomic Energy (11.4%). A significant portion of R&D funding originates from the government, with considerable allocation directed towards autonomous R&D laboratories operated by the government. These laboratories serve a pivotal role in driving research and technology development with strategic implications. This symbiotic relationship between government funding, R&D execution, and strategic focus underscores the integral role of the government in steering and fostering key scientific advancements.

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However, the contribution of private industries lags behind that of many other economies. At approximately $6.2 billion, Indian businesses represent 37% of the country’s GERD, in contrast to the global trend, where business enterprises typically contribute over 65% of R&D. In leading innovative economies such as China, Japan, South Korea, and the U.S., a significant portion (>70%) of R&D funding is from private industries, driven by market forces and profit motives, and the actual R&D activities are conducted in the HEIs. India’s R&D ecosystem has its advantages in terms of efficiency, but could benefit more from strong private enterprises involvement and stronger industry-academia collaboration, facilitating knowledge transfer and fostering innovation.

HEIs play a comparatively minor role in the overall R&D investment, contributing 8.8% ($1.5 billion). It is important to recognise that increasing industry contribution to R&D is a complex issue with no single solution. A multi-pronged approach involving diverse stakeholders is necessary to address the challenges and unlock the potential of R&D for India’s economic growth and competitiveness. Learning from the R&D ecosystem in other developed countries while maintaining India’s strengths in streamlined decision-making and strategic alignment could be a powerful force to optimise its R&D landscape. India must implement policies that incentivise private companies to invest in R&D.

Impact of initiatives

India’s technological and manufacturing aspirations hinge on a transformative shift in its R&D landscape. Closing the existing gap demands a dual strategy: encouraging private sector involvement and fortifying academia’s research infrastructure. Initiatives such as the National Deep Tech Startup Policy (NDTSP) signal a strong commitment to technological progress and innovation. This policy holds the potential to incentivise private sector engagement in India’s R&D ecosystem. Despite the substantial time and technical uncertainties involved in Deep Tech’s creation, allocating resources to safeguard intellectual property and tackle technical obstacles can unlock untapped markets. The recent enactment of the Anusandhan National Research Foundation (ANRF) Act, underscores the government’s dedication to catalysing research and innovation as the cornerstone of development.

This legislative move will bolster scientific research nationwide. The Act aims to bridge India’s persistent R&D investment gap while nurturing a robust research culture within HEIs. Although promising, this initiative must surmount challenges such as ensuring equitable fund distribution, fostering interdisciplinary collaborations, and upholding global standards. These efforts are poised to elevate R&D spending in India, providing strategic guidance for research, innovation, and entrepreneurship while encouraging greater private sector involvement. The interim Budget, combined with the NDTSP and ANRF Act, sends positive signals regarding India’s commitment to incentivising private sector-led research and innovation, particularly in burgeoning industries.

Animesh Jain is Policy Fellow, Policy Analytics and Insights Unit, Office of Principal Scientific Adviser to the Government of India. Anurag Anand is Technical Consultant, DST–Centre for Policy Research, Indian Institute of Science, Bengaluru

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