On R&D Funding and Deep Tech – Why the Union Budget’s plans for deep tech and research funding are significant

Source: This post on R&D Funding and Deep Tech has been created based on the article “Why the Union Budget’s plans for deep tech and research funding are significant” published in “Indian Express” on 8^th February 2024.

UPSC Syllabus Topic: GS Paper 3 – Science and Technology – Developments and their applications and effects in everyday life.

News: The article discusses the importance of Deep Tech and highlights the government’s initiatives in this regard. It also states the challenges in the funding of Deep Tech projects. Why the Union Budget’s plans for deep tech and research funding are significant? 

Background:

The Interim Budget included an announcement of a Rs 1 lakh crore fund to provide long-term, low-cost or zero-interest loans for R&D. A new scheme to strengthen deep-tech capabilities in the defense sector was also announced.

What is Deep Tech?

Deep tech refers to advanced and disruptive technologies that have the potential to cause transformative change and provide solutions for the future. It is used to describe cutting-edge research in nanotechnology, biotechnology, material sciences, quantum technologies, semiconductors, artificial intelligence, data sciences, robotics, 3D printing, etc.

What is The Importance of Deep Tech?

1. These technologies can help address complex global challenges like climate change, hunger, epidemics, energy access, mobility, physical and digital infrastructure, and cyber security.
2. They can also enhance productivity and drive economic growth and create jobs in coming years.
3. There are also associated benefits in terms of spin-off technologies (tech derived from a parent technology), trained manpower, entrepreneurship and technology exports.

With its large base of relatively high-quality science and engineering manpower and a well-established technology culture, India can be one of the frontrunners in Deep Tech.

What has The Government done in This Regard?

The government has tried to incentivize research in these areas by the following:

1) National Mission on Transformative Mobility and Battery Storage.

2) National Quantum Mission.

3) National Deep Tech Startup Policy: A policy framework to create an enabling environment for companies working in these technology areas was finalized.

4) National Research Foundation (NRF): Rs 1 lakh crore corpus to finance R&D. Startups and other private sector ventures are expected to be the main beneficiaries.

However, there have been only nominal increases in budgetary allocations of India’s science and research departments in the Interim Budget.

What are The Main Provisions of The National Deep Tech Startup Policy?

The policy seeks to address specific challenges faced by technology startups and provide them with a platform to compete and collaborate with the best in the world.

It talks about the following:

A) Create opportunities for long-term funding;
b) A simplified but stronger intellectual property rights regime;
c) Tax incentives;
d) A conducive regulatory framework;
e) Development of standards and certifications;
f) Nurturing of talent;
g) Linkages between industry, research centers, and educational institutions.

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What are The Challenges in The Funding of Deep Tech projects?

1) Capital-Intensive Sector: Most deep tech projects are time- and money-intensive, with relatively high funding requirements.

2) India’s Low Expenditure on R&D: It is far below the global average, and significantly lower than the scientifically advanced countries. India currently spends just about 0.65% of GDP on R&D. The global average is about 1.8%.

3) Lack of Private Sector Participation: Expectations of the infusion of private sector money into research have been disappointing. Finance has been both unpredictable and inadequate.

4) Bureaucratic Delays: Even where funds are available, delays and interruptions in disbursal often affect projects. Complex bureaucratic requirements contribute to delays.

Question for practice:

What is Deep Tech? Mention its applications. What are the challenges in the funding of Deep Tech projects?