India’s research and development (R&D) landscape has experienced remarkable transformations in recent years, emerging as a dynamic and rapidly expanding ecosystem. Several crucial factors contribute to this thriving environment. The announcement in the interim budget for 2024-2025 of a corpus of 1 lakh crore to strengthen the research and development ecosystem in the Indian subcontinent has ignited excitement within the scientific and research community.
In today’s rapidly evolving global economy, the significance of a robust research and development (R&D) environment in a country cannot be overstated. One of the primary reasons why a conducive R&D environment is vital lies in its ability to drive innovation and technological advancement. Through sustained investment in R&D initiatives, countries can spur breakthroughs in various fields, ranging from healthcare and biotechnology to renewable energy and artificial intelligence.
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India’s research and development sector is experiencing notable growth, marked by a significant increase in gross expenditure on research and development (GERD). However, India lags behind major developed and emerging economies in research and development investment as a percentage of GDP, which currently stands at 0.64%. By comparison, China allocates 2.4% of its GDP to R&D, Germany 3.1%, South Korea 4.8%, and the United States 3.5% while the same amongst other developing BRICS countries was—Brazil (1.3%), Russian Federation (1.1%), and South Africa (0.6%). This ratio was 0.3% for Mexico. This indicates a substantial gap that India must address to compete globally and drive domestic innovation and technological advancements.
There are several factors contributing to the comparatively low share of GDP allocation to research and development (R&D) in India
- Emphasis on Other Priorities: India faces various socio-economic challenges such as poverty, healthcare, and infrastructure development. These priorities often receive greater attention and funding compared to R&D, leading to a lower share of GDP being allocated to this sector.
- Infrastructure and Institutional Constraints: India’s R&D infrastructure and institutions, although improving, still face challenges such as outdated equipment, limited collaboration between academia and industry, and bureaucratic hurdles. These factors can hinder the effectiveness of R&D efforts and discourage higher allocations.
- Focus on Short-term Goals: There may be a tendency to prioritize short-term goals over long-term R&D investments due to political and economic pressures. This can lead to a reluctance to allocate more resources to R&D, which often yields results over a longer time horizon.
- Skill Gap: The availability of skilled researchers and scientists is crucial for effective R&D. India has made strides in education and skill development, but there is still a gap in terms of the number of qualified professionals needed to drive a robust R&D ecosystem.
- Global Competition: India competes with other countries in attracting R&D investments and talent. The global landscape, including factors like intellectual property rights protection, can influence how much R&D funding flows into the country.
Despite dedicating a lower share of its GDP to research and development, India has become a powerhouse in producing academic talent. The country generates an impressive number of 40,813 PhDs, placing it third behind the United States of America and the People’s Republic of China. This reflects India’s commitment to fostering intellectual capital and making significant contributions to global research efforts.
Trends in Research and Development (R&D) Statistics
The Gross Expenditure on Research and Development (GERD) in the country has consistently increased over the years, more than doubling from Rs. 60,196.75 crore in 2010–11 to Rs. 127,380.96 crore in 2020–21. India’s GERD as a percentage of GDP remained at 0.66% and 0.64% during 2019–20 and 2020–21, respectively.
India’s per capita Research and Development (R&D) expenditure rose to PPP$ 42.0 in 2020–21 from PPP$ 29.2 in 2007–08. Both R&D expenditure and GDP in absolute terms have exhibited a consistent upward trend over the years. The annual growth rate of R&D (both at current and constant prices) remained higher than that of GDP before 2000–01 but fluctuated thereafter.
From 2009–10 to 2017–18, GDP growth (both at current and constant prices) has exceeded the annual rate of growth of R&D. One possible reason for this trend could be the revision of the GDP series with a new base year (2011–12), which included a more comprehensive coverage of industrial and service sectors, resulting in higher GDP and its growth rate. From 2017–18 onwards, the annual growth rate of GDP and R&D expenditure has remained relatively stable.
India’s Gross Expenditure on Research and Development (GERD) rose to 57.9 billion current PPP$ in 2020–21 from 50.3 billion current PPP$ in 2014–15. According to the UNESCO Science Report 2021, India contributed 3.1% of the global GERD in 2018.
World Gross Expenditure on Research and Development (GERD) surged to 2232.57 billion current PPP$ in 2018 from 1859.13 billion current PPP$ in 2014. GERD is predominantly influenced by the Government sector, with the Central Government accounting for 43.7%, State Governments for 6.7%, Higher Education for 8.8%, and Public Sector Industry for 4.4%. In 2020–21, the Private Sector Industry contributed 36.4% to GERD.
During the fiscal year 2020–21, 84% of the R&D expenditure from Central Government sources originated from 12 major scientific agencies. Among these, the Defence Research & Development Organisation (DRDO) had the highest share of 30.7% of R&D expenditure, followed by the Department of Space (DOS) at 18.4%, the Indian Council of Agricultural Research (ICAR) at 12.4%, the Department of Atomic Energy (DAE) at 11.4%, Council of Scientific and Industrial Research (CSIR) at 8.2%, Department of Science and Technology (DST) at 6.8%, Department of Biotechnology (DBT) at 4.4%, Indian Council of Medical Research (ICMR) at 3.1%, Ministry of Electronics and Information Technology (MeitY) at 2.2%, Ministry of Earth Sciences (MoES) at 1.5%, Ministry of Environment Forest and Climate Change(MoEFCC) at 0.8%, and ministry of New and Renewable Resources (MNRE) at 0.1% during 2020–21.
The number of researchers per million population in India increased to 262 in 2020 from 255 in 2017, 218 in 2015, and 110 in 2000. Among developed countries, the Republic of Korea topped the list with 8714 researchers per million population in the world, followed by Israel (8342), Sweden (7930), Denmark (7692), Finland (7527), and Singapore (7287) in 2020.
India’s scientific publication output has shown a rising trend over the last decade, growing faster than many developed and developing countries such as the USA, UK, Germany, France, Japan, South Korea, and Brazil. During 2021–22, a total of 66,440 patents were filed in India, with 29,508 (44%) filed by Indian residents. According to the WIPO Report 2022, India is ranked 7th in terms of Resident Patent Filing activity globally. Patent applications in India are mainly dominated by disciplines like Computer/Electronics, Mechanical, Communication, and Bio-medical.
During the fiscal year 2021–2022, approximately 67.1% of the foreign patents filed in India originated from five countries: the USA (32.7%), Japan (13.1%), China (10.5%), Germany (7.3%), and Switzerland (3.6%). According to the WIPO Report 2022, India’s Patent Office ranks 6th among the world’s top 10 Patent Filing Offices.
Understanding the Current Landscape
India’s research and Development (R&D) landscape is predominantly driven by government initiatives and academic institutions. While these entities play a crucial role in fostering innovation, the limited participation of private industries presents a significant gap. Unlike countries such as the United States and China, where private sector investment in R&D is substantial, India’s private enterprises often prioritize other areas for investment.
Challenges Faced by Private Industries
Several factors contribute to the low contribution of private industries in R&D funding in India. One primary challenge is the perception of risk associated with R&D investments. Many companies prefer safer, short-term investments with guaranteed returns rather than allocating resources to long-term research projects with uncertain outcomes.
Additionally, the lack of a robust ecosystem for collaboration between industry and academia further hinders private-sector participation. Unlike developed nations where partnerships between universities and businesses are common, India’s infrastructure for such collaborations is still evolving, making it less attractive for private companies to engage in R&D activities.
Government Initiatives and Incentives
Recognizing the importance of boosting private sector R&D funding, the Indian government has introduced various initiatives and incentives. These include tax benefits for companies investing in R&D, grants for collaborative projects between industries and research institutions, and schemes to promote innovation and technology adoption.
While these initiatives have shown some positive results, there is still room for improvement. Many companies remain unaware of the available incentives, and the bureaucratic processes involved in accessing these benefits can be cumbersome, deterring smaller enterprises from participating.
The Role of Public-Private Partnerships
One promising avenue for enhancing private sector involvement in R&D funding is through public-private partnerships (PPPs). By fostering collaborations between government bodies, academic institutions, and private enterprises, PPPs can leverage collective expertise, resources, and funding to drive innovation.
Successful examples of PPPs in India include joint research projects between industry leaders and premier research institutes, technology transfer programs, and innovation hubs that facilitate knowledge exchange and networking among stakeholders.
Encouraging a Culture of Innovation
Beyond financial incentives and partnerships, fostering a culture of innovation is paramount to encouraging private sector investment in R&D. Companies need to embrace a mindset that values experimentation, failure as a learning opportunity, and long-term vision over immediate gains.
Educational initiatives aimed at promoting entrepreneurship and innovation from an early age can also play a crucial role in shaping future leaders and innovators who prioritize R&D as a strategic investment.
While India has made significant strides in various sectors, the low contribution of private industries in R&D funding remains a concern. Addressing this issue requires a multi-faceted approach that includes creating an enabling environment through policy reforms, simplifying access to incentives, fostering collaborations through PPPs, and nurturing a culture that values innovation and long-term growth. By unlocking the potential of private sector participation in R&D, India can accelerate its journey towards becoming a global innovation hub.