R&D: A public & private challenge

Source: The post “R&D: A public & private challenge” has been created, based on “R&D: A public & private challenge” published in “Indian Express” on 11 November 2025.

UPSC Syllabus: GS Paper 3 – Indian Economy

Context: Research and Development (R&D) is the backbone of innovation, economic growth, and technological self-reliance. However, India’s Gross Expenditure on R&D (GERD) as a share of GDP has stagnated around 0.7% for three decades, far below the OECD average of 2.7%, South Korea’s 4.9%, Japan’s 3.4%, and China’s 2.8%. This low investment threatens India’s scientific competitiveness and its goal of achieving Atmanirbhar Bharat.

Current Scenario

• Public dominance: Around 58–60% of India’s GERD comes from government sectors like defence, space, and atomic energy.
• University sector: Despite having over 1,100 universities and 48,000 colleges, it contributes only 7% of GERD, even though it produces more than half of the country’s scientific papers.
• Private sector: Public companies contribute barely 4%, and large private firms invest minimally — Infosys (~1% of turnover), Wipro (0.65%), L&T (0.13%), Vedanta (0.02%), and Reliance (0.6%).
• Global comparison: In developed economies, the private sector invests 1.5–3% of GDP in R&D, but in India, it’s barely 3%.

Government Efforts

Successive governments have aimed to raise GERD to 2% of GDP, linking R&D with the goal of technological sovereignty.
Key initiatives include:

1. National Missions in critical sectors — AI, green hydrogen, semiconductors, electric mobility, quantum computing, biopharma, and ocean research.
2. Anusandhan National Research Foundation (NRF): Aims to expand private participation, with 70% of its ₹1.4 lakh crore budget expected from private investors.
3. Research and Development Innovation Scheme and Vigyan Bhara for capacity building.
4. Integration of R&D in Production-Linked Incentive (PLI) schemes and structural reforms aligned with Atmanirbhar S&T policies.

Challenges in R&D Investment

1. Low private sector participation: Major Indian firms underinvest compared to global peers; only 2% of listed firms qualify as R&D-intensive.
2. Limited academic research funding: Universities receive minimal support despite producing significant research output.
3. Over-concentration in strategic sectors: Around 60% of R&D spending goes to defence, space, and atomic energy, leaving limited support for civilian innovation.
4. Weak innovation culture: Poor collaboration among academia, industry, and government reduces innovation translation.
5. Policy gaps: Lack of a robust mechanism to verify claims under tax incentives for in-house R&D.
6. Insufficient coordination: Institutions like CSIR have limited regional engagement with small and medium enterprises (SMEs).
7. Dependence on public funding: New missions rely on private participation that may not materialize as expected.

Way Forward

1. Strengthen private sector role: Encourage industrial R&D through fiscal incentives, competitive grants, and recognition mechanisms.
2. Expand university-industry collaboration: Increase funding to universities and foster innovation clusters linked to local industries.
3. Reform CSIR and create regional R&D hubs to coordinate with MSMEs and support technology diffusion.
4. Institutionalise accountability: Ensure proper monitoring of R&D tax incentives and outcomes.
5. Adopt global best practices: Learn from South Korea’s R&D–industry partnerships and innovation-driven ecosystems.
6. Enhance public spending: Increase government GERD to at least 1.5–2% of GDP in the next three years to attract matching private investment.
7. Encourage frontier research: Support national missions in AI, quantum, semiconductors, and biopharma with clear timelines and deliverables.

Conclusion: India’s aspiration to become a global innovation hub and achieve strategic autonomy depends on transforming its R&D ecosystem. While public investment provides a strong foundation, private participation, academic collaboration, and effective policy implementation are essential. Raising R&D spending to 2% of GDP and ensuring balanced public-private contribution will not only boost economic resilience but also secure India’s technological future amid rising global uncertainties.

Question: Why is India’s investment in Research and Development (R&D) low? Suggest measures to boost private sector participation and strengthen the R&D ecosystem.