{"id":309179,"date":"2024-09-03T20:06:01","date_gmt":"2024-09-03T14:36:01","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=309179"},"modified":"2024-09-03T20:06:01","modified_gmt":"2024-09-03T14:36:01","slug":"state-of-rd-spending-in-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/state-of-rd-spending-in-india\/","title":{"rendered":"State of R&D Spending in India"},"content":{"rendered":"

Source<\/span><\/b>: The post State of R&D Spending in India has been created, based on the article \u201c<\/span>R&D: Why the private sector falls behind<\/span><\/b>\u201d published in \u201c<\/span>Business Standard<\/span><\/b>\u201d on 3rd August 2024<\/span>\u00a0<\/span><\/p>\n

UPSC Syllabus Topic: <\/span><\/b>GS Paper3-Science and Technology<\/span>\u00a0<\/span><\/p>\n

Context<\/span><\/b>: The article discusses India’s need for more research and development (R&D) spending. It highlights that India’s current R&D spending is low compared to other countries, partly due to limited competition in domestic markets and a lack of incentives for businesses.<\/span>\u00a0<\/span><\/p>\n

For detailed information on <\/span>Issues with India\u2019s R&D expenditure <\/span><\/b>read this article here<\/span><\/a>\u00a0<\/span><\/p>\n

What is the Current State of R&D Spending in India?<\/span><\/b>\u00a0<\/span><\/h2>\n
    \n
  1. India spends only 0.65% of its GDP on research and development (R&D), significantly lower than countries like South Korea (4.8%) and China (2.4%).<\/span><\/li>\n
  2. The government contributes over 60% of total R&D expenditure, focusing on defense, space, agriculture, and nuclear research.<\/span><\/li>\n
  3. The private sector\u2019s share in R&D has declined from 45% in 2012-13 to 40% in 2020-21.<\/span><\/li>\n<\/ol>\n

    What Factors Affect R&D Investment?<\/span><\/b>\u00a0<\/span><\/h2>\n
      \n
    1. Competitive Forces:<\/span><\/b> Countries with higher exposure to global competition tend to invest more in R&D. For example, South Korea and Taiwan have high R&D spending because their firms face intense global competition.<\/span><\/li>\n
    2. Economic Structure:<\/span><\/b> Resource-rich countries like Indonesia and Mexico spend less on R&D (0.28% and 0.3% of GDP, respectively), showing that R&D investment is influenced by the underlying economic structure.<\/span><\/li>\n
    3. Government Incentives:<\/span><\/b> Though India offers R&D tax deductions, the benefits are limited. Micro, small, and medium enterprises (MSMEs) struggle with protecting intellectual property due to court delays.<\/span><\/li>\n<\/ol>\n

      Why Does India Need More R&D?<\/span><\/b>\u00a0<\/span><\/h2>\n
        \n
      1. India needs to invest more in research and development (R&D) to progress faster and more effectively.\u00a0<\/span><\/li>\n
      2. Innovation will play a key role if incomes are to quadruple in the next two to three decades while addressing inclusion and sustainability challenges.<\/span><\/li>\n<\/ol>\n

        Why Is India’s R&D Spending Low?<\/span><\/b>\u00a0<\/span><\/h2>\n
          \n
        1. A key reason is India’s low per capita income, which generally correlates with lower R&D investment.<\/span><\/li>\n
        2. Limited competition in domestic markets reduces the need for firms to invest in R&D.<\/span><\/li>\n
        3. High profit-earning ratios in India reduce the incentive for businesses to invest in uncertain R&D.<\/span><\/li>\n
        4. Cultural sentiment among Indian businessmen often favors short-term gains over long-term, uncertain R&D investments.<\/span><\/li>\n
        5. Protective market policies, such as high tariffs, lower the competitive pressure on firms, reducing their incentive for R&D.<\/span><\/li>\n<\/ol>\n

          What Could Drive More R&D in India?<\/span><\/b>\u00a0<\/span><\/h2>\n
            \n
          1. Increase Competitive Forces<\/span><\/b>: More competition in domestic markets can push firms to innovate. High tariffs and non-tariff barriers currently protect firms, reducing their need to invest in R&D.<\/span><\/li>\n
          2. Encourage Global Market Participation<\/span><\/b>: Firms that compete globally are more likely to invest in R&D. For example, South Korea and Taiwan have higher R&D spending due to their global market presence.<\/span><\/li>\n
          3. Reduce Market Protection<\/span><\/b>: Reducing domestic market protection can compel firms to invest in R&D to stay competitive, as seen in other countries with higher R&D spending.<\/span><\/li>\n<\/ol>\n

            Question for practice:<\/span><\/b>\u00a0<\/span><\/p>\n

            Examine why India\u2019s current R&D spending is lower compared to countries like South Korea and China.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

            Source: The post State of R&D Spending in India has been created, based on the article \u201cR&D: Why the private sector falls behind\u201d published in \u201cBusiness Standard\u201d on 3rd August 2024\u00a0 UPSC Syllabus Topic: GS Paper3-Science and Technology\u00a0 Context: The article discusses India’s need for more research and development (R&D) spending. It highlights that India’s… Continue reading State of R&D Spending in India<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,1227],"tags":[10503,216,242],"class_list":["post-309179","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-science-and-technology","tag-business-standard","tag-gs-paper-3","tag-science-and-technology","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/309179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=309179"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/309179\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=309179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=309179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=309179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}