India- world’s fifth largest economy spends less than one percent of its GDP in Research and Development, compared to the world average!
Prannab Pani
Preface
We live in an age defined by knowledge and we are aware of its importance and its value to the humanity. Research to all issues concerned helps unravelling the truth and the science behind that, which helps is designing innovative ideas, either for its enhancement or containing the same as required, benefiting the humanity.
I was one of the speakers in a recent conference on Innovation and Research in India Inc., along with several industry captains and eminent academics here in Bangalore. My talk had extensive current data on this issue which most people present there were aware of and agreed to as well. But what most appreciated, was my suggestions to improve the scenario, both at the private as well as the government level. But it all boils down to the intention and the willpower or the absence of it. Mediocrity shadows merit in whatever works are being carried out hence, we still don’t boast of any world-class made-in-India product. IT industry continues to stay engaged in the service projects, leveraging on its fast shrinking price advantage. Start-ups too rarely attempt anything unique and world-class. India Inc., cares for its top-line and bottom-line growth only, keeping happy its shareholders. Investment in R&D is thus, considered a strain and it doesn’t have the patience either as research takes considerable time in its process.
The overall political ecosystem doesn’t encourage it in any manner, nor our job oriented education system. Government of India continues to be in the election mode and the people’s voice remains mute. Priorities misplaced everywhere in India. False narratives consume us all…!
Global Supply Chain
India has been focusing on the Service sector from its inception, especially with the advent of IT businesses. It has established itself as a major global leader in that, mostly leveraging on its cost advantages over the developed countries. But the same does not stay unchallenged. Several smaller countries have entered this space with the same advantage, thus disturbing India’s hegemony. Entry of AI has changed the story completely today, threatening the services sector completely and this has adversely impacted India today, which sees a shrinking market for it now, hence quivering for reinvention and changes in the business strategy.
Let’s have a look at the countries that have been calling the shots in the global supply chain market. USA, China, Taiwan, Singapore, Russia, Japan, Germany, South Korea and France are the ones leading the world in major manufacturing and unique product development- including in the new-age technology spheres like Semiconductor/VLSI, making huge investments and with the establishment of large Data Centres within. All these countries have been concentrating on Product Development and supplying to the world at large. Every electronic item source their raw materials and equipment/components from them, without which nothing can be made.Most of these countries are leading the world in AI-ML creating their own unique platforms and tools. They are not just self-reliant but have become the de-facto global suppliers and feeders. Unfortunately India does not yet figure in any of these, hence depending on its import from these countries, all the time. We are facing the heat whenever there is a challenge we face due to its absence or when there is a short-supply. We have not yet understood the global supply chain dynamics and its benefits in today’s volatile geopolitics. It is time to revisit our businesses and trade strategies and priorities, to be truly self-reliant, beyond the rhetoric.
Prevailing Scenario
As of 2024–2025, China and the United States are the top global R&D spenders, each investing over $780 billion annually, with China leading by a narrow margin. Other leading investors include Japan, Germany, South Korea, Israel, Sweden, Finland, and the UK, with significant private sector contributions driving growth in tech-heavy regions, as a significant percentage of their GDP.
India’s Gross Expenditure on R&D (GERD) currently stands at approximately 0.6% to 0.7% of its GDP, which is often one fifth compared to advanced countries. Similarly, Indian companies spend less than 1% of net sales on R&D. I am of the opinion that large businesses should/must be required to spend 1.5% in R&D and perhaps 1.5% in CSR. Domestic R&D investment needs to be increased substantially.
Driven by rising domestic innovations and awareness of IPR, 68,176 Patents were filed by Indian citizens in 2024-25, an increase of 19% over the previous fiscal year. Indian companies, MSMEs and Startups view IP as a strategic business asset, but with little innovation and with limited market impact.
The failures of our knowledge production ecosystem, however often get a free pass, escaping close scrutiny.
So I find it as an incentive misalignment problem. Entrepreneurs are not mass vote pullers and Private Corporation in India has bang for the buck in being crony and not innovation.
MSMEs account for 30% of India’s GDP, constituting 48% of the country’s total exports and employing about 110 million people.Offered support incentives need to be aligned to engage in the R&D.
What’s required?
Nothing will happen with Macro planning. Government and private at macro are mere performative activism or event oriented. Entire chain has no incentive to do things…beyond talking. We must increase investment substantially in the domestic R&D.
a. Focus on the Knowledge Production Institutions
Unless, the knowledge is reaching the research labs, academics gets limited to only degrees. Majority of Indian Universities have their primary focus on brand building to attract more students and increase their income. More money is being spent on its government accreditation and mere publication of academic papers but with less spending on real R&D. No wonder, majority of the Indian graduates are viewed by the industry as not employable, disturbingly increasing the unemployment numbers.
And now less jobs, more people, more degrees. Not a good factor for economy.
The government has been implementing several schemes/programmes to promote scientific research and improve funding mechanisms in State universities and higher education institutions by strengthening science & technology (S&T) infrastructure and research capabilities. Some of the key schemes/programmes include: Fund for Improvement of Science and Technology Infrastructure (FIST); Sophisticated Analytical Instrument Facilities (SAIF); Sophisticated Analytical & Technical Help Institutes (SATHI) which can readily be accessible to Academia; Consolidation of University Research through Innovation and Excellence in Women Universities (CURIE) to support research infrastructure in women universities; Promotion of University Research and Scientific Excellence (PURSE); ANRF-Partnerships for Accelerated Innovation and Research (PAIR) Program to boost the research capability of those institutions where research is at a nascent stage but which have the potential to perform well, in a mentorship mode by pairing them with well-established top-tier research institutions in a hub and spoke framework; Department of Biotechnology-Boost to University Interdisciplinary Life Science Departments for Education and Research (DBT-BUILDER) programme. Council for Scientific and Industrial Research (CSIR), under its Extramural Research Scheme, provide support to research proposals from central/state universities and R&D institutions in frontier areas of science and technology.
b. Increase in Government Budget offering Incentives
With such a miniscule budget for the R&D works India cannot manage its progress through technology to enhance manufacturing skills and workmanship, which is acutely required for the improvement in the industries, which will help itself to produce its own products, and to be in the global supply-chain trajectory. How can India dream of developing an “Atmanirbhar Bharat” and “Vikshit Bharat” when our budget for the research and innovation is less than one percent of our national GDP? It is an irony considering several supportive schemes and funds being offered by the Government of India but has not enthused either the industries or the academics. Why so? What’s the missing link?
c. Corporate Thrust
Private sector investment is increasing, with top firms spending Rs. 17,300+ crore in FY24, yet overall corporate contribution lags behind the public sector and global peers. There is relatively low investment by India’s private sector in GERD, accounting for only around 36%, whereas in the other leading countries, private sector contributions are more than 70%.
India Inc. must act responsible towards making India self-reliant and developed by investing heavily in R&D, which will help them as well to penetrate into the global market with respect and for better valuation. Companies must change their outlook towards business and aim to be global players manufacturing and selling own products.
d. Striving for Excellence
Analyse statistics for correct perspectives. Enhancing:
- Research Quality
- Commercial Potential
- Global Competitiveness
For example, innovations could combine Clean Energy using Digital Intelligence and Circular Systems to accelerate sustainability. Growth should not come at the planet’s expense, but where progress fuels Regeneration.
It has been observed and repeatedly reported that the PhD thesis papers and other research papers from India are of lesser quality as mostly these are not innovative or path-breaking. Yet, each year, several thousands are receiving their PhDs and others are managing to present and publish their papers in the international forums and journals.
Absence of a general consensus and a lack of research oriented approach to life, make us Indians less enthusiastic to invest in R&D, which even the Corporate considers a strain on their balance sheet. Researches are time consuming and this doesn’t seem to help the cause, as patience is not a common trait these days of 2-minute noodles and instant gratification, quick bucks always. No wonder, we continue to celebrate mediocrity and stay contented with our small achievements, as long as the monetary gains are substantial.
This author has spoken to several industrialists, entrepreneurs, academics and the research scholars to understand the prevailing ecosystem and our general psyche.
I also have spoken with several professors and Indian students in the top universities in USA and UK, as well as here in India, to understand about the continuous flight of bright young minds from India, inspite of having our IITs, IISc, IISER, IIMs and the likes. The outcome of my research elicited a single phrase- Striving for Excellence. It aims to extract the best out of you by encouraging you to push the envelope, exceeding the expectations. This pushes you not to be content with self-satisfaction, but to excel with innovative ideas and out-of-box solutions, at times, revolutionary inventions. All these can happen when the ecosystem encourages free thinking, being inquisitive, asking tough questions and thinking differently- all without fear or malice, holding you head high.
Last Word
Scientific temperament, free thinking and expression supported by innovative ideas, using appropriate technology, and with problem solving skills can only help the bright young minds to be engaged in research and innovation in India, which is the need of the hour to develop own products and tools to primarily address country’s challenges and taking it beyond the boundary to be a respected global player in the supply-chain, thus propelling India to the leadership position.
A sincere effort and thoughtful approach is required from the government, India Inc. and the knowledge producing centres- the universities, fostering a culture of excellence, investing generously in research and innovation, supporting science and technology. Action beyond rhetoric and tokenism could only help the cause, which is not in any healthy condition. We have the bright brains. We just need to change our mind-sets and there should have an ecosystem that encourages freedom of thinking, scientific temperament, untouched by politics, encourage for research and innovation, while striving for excellence in every field of work and developing a sense of pride and ownership, to make India truly developed and progressive.
To be true Atmanirbhar (self-reliant) and Vikshit Bharat (developed India) large investment in research and innovation, supporting science and technology, focusing on addressing country’s challenges and to be the global hub in helping every country in the world in solving multiple issues. This surely can be achieved when all aforesaid stakeholders in our country come together, shouldering responsibilities, investing generously in research and innovation, emulating the leading countries in the world to have Made-in-India – Made-for-the World products. Together WE Can.
Celebrate Life!
(The author is a Corporate Strategist, Entrepreneur, and Startup Mentor. Views expressed are personal.)
For more articles by the author under the series please visit:
Of Discussions, Debates & Arguments
Parenting – The Art and Responsibility of Shaping Lives
Failure is not the End: Rise, Learn, and Rebuild Life
