An overview of research and development in India

By Priya Chetty & Ankita Agarwal on October 4, 2022

We owe a lot to the Indians, who taught us how to count. Without which no worthwhile scientific discovery could have been made.

Albert Einstein

Historically, India was called the ‘land of inventions’. From the concept of zero to the science of life in Ayurveda, the country has gifted this world so much (Pal, 2016).

At the time of India’s independence, in 1947, the West was already far ahead in terms of Science and Technology, while a fledgling India was confronted with multiple challenges. The excruciating partition, a fragile economy, massive chaos, and the newly discovered political autonomy; everything had to be taken charge of together (Davar, 2019; Palat, 2021; The Wire Science, 2020). Even then research and development (R&D) was a part of the Government’s plan under Prime Minister, Pandit Jawaharlal Nehru, the cultivator of scientific temper in India. But many of his policies proved a practical failure owing to a closed economy and the results were not evident in the short run (The Wire Science, 2020).

India’s research and development (R&D) at a glance

The research and development process necessitates equal participation from three main stakeholders.

  • Central government
  • State government
Government
  • Higher education institutions
  • Independent government-funded research labs
  • Incubation centres
Academia
  • Public sector companies
  • Private sector companies
Industry

One of the significant transformations that can be witnessed over the years is a change in the relative share of stakeholders in India’s R&D ecosystem. India’s R&D ecosystem comprises five stakeholders who contribute their varying shares to fund the country’s research and development. The most prominent among these is the Central Government while the others include the State Government, Public Sector Industries, Private Sector Industries, and Higher Education Institutes (Department of Science & Technology, 2020).

Each of these stakeholders has undertaken multiple efforts in the past ten years to boost the collaboration, output and efficiency of India’s R&D, including the establishment of research hubs, policies and initiatives. The Central Government has invested the major share in India since its independence, however, it is on a decline while that of the private sector is increasing. Corporate India is finally looking forward to R&D for product innovation as the major re-investment destination. India is an exception in this regard, as, in most nations, the Central Government’s share in the total research and development (R&D) expenditure is far lesser than that of the Private Sector (MoneyControl News, 2022).

Share of Central Government, State Government and private sector in India’s research and development expenditure (MoneyControl News, 2022)

Recent efforts by different stakeholders

 
INDUSTRY

  1. The industry holds a 36.7% share of India’s total R&D spending.
  2. Major R&D spending is on automobile, pharmaceutical & semiconductor research.
  3. Spending grew only by 0.32% in FY20 during the Covid-19 pandemic.
  4. In the next 10 years, spending is expected to be focused on cyber security, cloud computing, AI and 5G.

 
GOVERNMENT

  1. The government of India’s recent mandate widens the scope of CSR spending to include R&D.
  2. Initiatives to boost R&D spending include the establishment of think tanks (NRF), laboratories (Atal Tinkering Labs), and institutional collaborations (IITs, IISc, etc).
  3. GoI introduced a patent box in the Finance Bill (2016) that levies a 10% tax on royalties from patents registered in India.
  4. Establishment of Manthan website for fostering industry-academia partnership for R&D projects.

 
ACADEMIA

  1. The most significant move of academia in recent years is the formation of R&D clusters and research parks consisting of premier STEM educational institutions in Tier-1 and Tier-2 cities.
  2. University Grants Commission has directed every academic institution to establish a Research and Development (R&D) Cell to facilitate networking & collaborations for interdisciplinary and multidisciplinary research.
  3. Publicly-owned higher education institutions are the primary catalysts of the “Skill India” mission with the aim of providing quality education, training, and research and rolling out efficient human resources.

Sources: ForumIAS, 2022; Ministry of Education, 2021; Murali, 2019; Pandey, Mukherjee, & Ayachit, 2021; Pohit, 2021; Sharma, 2022; The Week, 2022; Trikha, 2020; Yadav, 2020.

Reasearch and development budget allocation to different sectors in 2018 (Pental, 2022)

The impetus in India’s R&D scenario was gained only after economic liberalisation. From 1990-91, Government’s expenditure on R&D was 0.6% of the Gross Domestic Product (GDP) which increased to 0.7% in 2000 and since then it has been so. The only exception was the years 2005 and 2010 when it was 0.8% of the GDP. Currently, India spends only $43 per capita on R&D, which is way below its Asian counterparts like China ($368) and Russia ($285) (Fortune India, 2022).

India’s research and development expenditure since 1990 (Department of Science and Technology, 2020)

Importance of research and development (R&D) expenditure to an economy

R&D expenditure is an indicator of technological change, innovation, and economic progress of a nation (İşcan & Öğrü, 2021). There are three types of research- basic, applied, and development- which serve unique purposes. A nation to facilitate innovation and economic progress must invest strategically in all three.

R&D takes place not just in STEM-dominated fields like medical sciences or electronics. There is a gamut of business verticals and macroeconomic functions that warrant R&D to see visible improvements in profitability, the standard of living and sustainability. Moreover, India relies greatly on R&D for the following reasons (ForumIAS, 2022):

  • To create low-cost indigenous solutions.
  • To improve knowledge dissemination in rural and remote areas.
  • To reduce dependency on imports, particularly electronics.
  • Tackling national medical and natural emergencies.
  • To handle the repercussions of climate change using technology.

Impediments in India’s R&D

The government’s expenditure on R&D has almost tripled over a decade, but its percentage in India’s Gross Domestic Product (GDP) has consistently recorded a decline. This comparison matters because it exhibits a country’s research intensity. While the expenditure alone indicates the R&D expenditure, Government’s expenditure on R&D to GDP % provides an idea of the research intensity i.e., how much of the country’s GDP is re-invested for promoting research. The higher the R&D intensity, the more innovative and progressive a nation becomes (Tudor & Sova, 2022).

Comparing it on a global level with some of the most innovative nations, India’s spending on R&D is far below the global average. The World Bank data provides that R&D expenditure as a percentage of GDP globally stood at 1.99 in 2008 and it rose to 2.2 in 2008 (The World Bank, 2022). It has consistently been much higher in highly innovative nations like:

  • Israel (5.14%),
  • Germany (3.17%),
  • Switzerland (3.15%), and
  • Singapore (1.89%) (The World Bank, 2022).  

It is therefore unsurprising that India currently ranks 46 in the global innovation index, much below smaller countries like Iceland and Estonia (The World Bank, 2022).

These figures are important because it indicates that the Indian government is probably not laying the required emphasis on R&D. There is no set rule for a country regarding how much Government’s expenditure on R&D as a percentage of GDP should be appropriate; it rather depends upon the overall economic goals of the government. A few countries spend more, because they chose a research-intensive development strategy, while others may refrain from doing so. In general, the country’s GDP per capita can be employed as the base, as it represents the overall affordability of the country to spend on R&D.

A systemic redressal is needed to improve India’s research and innovation performance

Low expenditure isn’t the only impediment India faces when it comes to R&D and innovation. To bring it to a level where it’s comparable with better-performing nations’, it’s critical to address many systemic issues like skilling India’s youth, building an open innovation ecosystem, and strengthening our regulatory framework. From a strictly scientific standpoint, even though the number of research papers we publish every year is rising, its reach remains stunted because of the low impact factor and language of publication.  A range of other such challenges exist, which can be better understood when we classify them as:

  • Structural issues: Those emerging from policies, systems and frameworks governing R&D, which build the foundation for a strong scientific community.
  • Manpower crunch: Issues concerning finding the talent which is central to a knowledge economy.
  • Bureaucratic principles: Problems stemming from navigating our complex, independent yet uniform administrative processes.
  • Intellectual property: The systems governing the protection of inventions.
Challenges faced in India’s research and development
Challenges faced in India’s research and development (Babu, 2022; ForumIAS, 2022; IIFL Securities, 2018; Indian Express, 2016; Sonkusare, Rao, & Sinha, 2021)

It is evident from the data that India has a long way to go to emerge as an innovation powerhouse for the world. The relationship between R&D and innovation is obvious from the discussion. It is also a matter of severe concern that the Government’s expenditure on R&D as a percentage of Gross Domestic Product (GDP) is consistently on a decline. But the analysis also indicates that solely increasing the government’s expenditure on R&D % of GDP would not resolve the issue because the government is already spending a good portion if we consider the GDP per capita of India.

The problem, therefore, lies in the overall R&D ecosystem in the country which demands a transformation. Furthermore, there is a need for the Central Government to motivate other stakeholders as well as to accentuate their participation in R&D investment. This is actually a vicious cycle, the higher the country performs on economic indicators, the higher its affordability for R&D, which further leads to enhanced opportunities for innovation and economic development.

References

  • Babu, V. (2022). TOP CHALLENGES FACED BY ER&D ORGANISATIONS IN 2021.
  • Davar, P. (2019, November). Nehru’s contribution to India’s scientific growth.
  • Department of Science & Technology. (2020). Research & Development Statistics at a Glance. New Delhi.
  • Fortune India. (2022, July 21). India’s R&D expenditure is one of the lowest in the world: NITI Aayog. Fortune India. Retrieved from https://www.fortuneindia.com/enterprise/indias-rd-expenditure-is-one-of-the-lowest-in-the-world-niti-aayog/109030
  • ForumIAS. (2022). Research and Development in India: Status, Challenges and Recommendations – Explained, pointwise.
  • IIFL Securities. (2018). India’s private and public R&D situation.
  • Indian Express. (2016, December 1). Bureaucracy, corruption main hurdles for companies in India: Report. Indian Express.
  • İşcan, E., & Öğrü, G. (2021). The Impact of R&D Spending and Technology on Economic Development. Engines of Economic Prosperity, 359–374. https://doi.org/10.1007/978-3-030-76088-5_19
  • Ministry of Education. (2021). Steps taken by the Government for developing the linkage between educational institutions, Industries and R&D Institutions. Retrieved September 29, 2022, from Government of India website: https://pib.gov.in/Pressreleaseshare.aspx?PRID=1704879
  • Murali, S. (2019). Research and Development in India – An Overview.
  • Pal, S. (2016). 16 Significant Science and Tech Discoveries Ancient India Gave the World.
  • Palat, M. K. (2021, December). Nehru did not set the natural, experimental and exact sciences in opposition to human sciences.
  • Pandey, A., Mukherjee, D., & Ayachit, A. (2021). R&D and Innovation in Corporate India.
  • Pental, D. (2022, February 24). Budget should have allotted more funds for R&D. Indian Express.
  • Pohit, S. (2021, December 12). Why India always misses the innovation bus. The Hindu Business Line.
  • Sharma, V. (2022, March 14). UGC Asks Universities, Colleges To Implement Guidelines For Setting Up Of R&D Cell. Odisha TV.
  • Sonkusare, A., Rao, S. M., & Sinha, N. (2021). REFORMS AND ACTION POINTS TO STRENGTHEN SCIENCE, TECHNOLOGY AND INNOVATION ECOSYSTEM IN INDIA. Science Reporter, August. Retrieved from https://www.niti.gov.in/sites/default/files/2021-09/PublishedReformsinST.pdf
  • The Week. (2022, September 27). A commitment to meet requirements of country’s energy and petroleum sectors. The Week. Retrieved from https://www.theweek.in/wire-updates/business/2022/09/27/del50-prayas-creations-advertising-pvt-ltd—rajiv-gandhi-institute-of-petroleum-through-mediawire.html
  • The Wire Science. (2020, January). How Nehru’s Politics Hobbled Modern India’s Use of Technology for Development .
  • Trikha, R. (2020). Industry-Academia R&D Partnerships: Strengthening Indian Innovation Ecosystem.
  • Tudor, C., & Sova, R. (2022). Driving Factors for R & D Intensity : Evidence from Global and Income-Level Panels. Sustainability, 14(1854), 1–16.
  • Yadav, S. P. (2020). Indian Corporates Need To Invest In R&D For Make-in-India To Succeed.

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