[Answered] Analyze the role of private sector contributions to research and development in India compared to that in developed countries. What measures can be taken to enhance private sector participation in R&D in India?

Introduction: Give a brief context to the question

Body: Highlight the role of the private sector in R&D and measures to enhance their participation

Conclusion: Way forward

Private sector contributions to research and development (R&D) play a crucial role in both developed countries and emerging economies like India. The private sector’s contribution to India’s overall research and development expenditure as a fraction of GDP has been low. In 2020-21, the private sector industry contributed 36.4% of the national gross expenditure on R&D (GERD), with the Centre (43.7%), State governments (6.7%), higher education (8.8%), and public sector industry (4.4%) accounting for the rest.

Role of the private sector in R&D as compared to developed nations

  • Contribution: The private sector contributes around 36.4% of Gross Domestic Expenditure on R&D (GERD) as of 2020-21 while corresponding share for Germany, South Korea, and the United States, where the private sector contribution as a percentage of the national GERDs is 67%, 79%, and 75%, respectively.
  • Nature of investment: Developed countries typically have well-established private sector R&D ecosystems with significant investments from corporations across various industries, driven by factors such as market competition, the need for innovation to stay ahead, and strong intellectual property protection. In contrast, India’s private sector participation in R&D has historically been lower. Factors such as limited R&D infrastructure, regulatory challenges, and a focus on short-term profitability have hindered greater private sector involvement.

Measures to Enhance Private Sector Participation in R&D in India

  • Strengthening Incentives: Offer tax breaks, matching grants, and other financial incentives specifically targeted towards private R&D investments in priority sectors.
  • Creating a Stable Policy Environment: Implement consistent and predictable policies to encourage long-term R&D planning by the private sector.
  • Promoting Collaboration: Facilitate partnerships between research institutions, universities, and private companies to foster knowledge sharing and joint R&D projects.
  • Skill development: Invest in training programs to enhance the R&D capabilities of the Indian workforce, making them more attractive for private sector employment.
  • Promote industry-academia collaboration: Establish mechanisms to facilitate collaboration between industry and academic institutions, such as joint research projects and technology transfer agreements.


The recent announcement in the budget of a corpus of ₹1 lakh crore to encourage the private sector to scale up research and innovation is significant as it will increase their contribution to R&D. However, more needs to be done and public sector R&D expenses need to increase especially at the State level, if only to improve the quality of research facilities at State universities to boost research and work on locally relevant problems.

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