Why India Must Deepen Its Commitment to Research and Development
It’s often said that the secret to a nation’s long-term success lies in its ability to innovate. Countries that invest heavily in Research and Development (R&D) tend to grow faster, adapt better to global changes, and remain competitive over time. While it’s easy to import technologies or replicate existing models, nothing matches the impact of home-grown innovation. Developed nations realized this truth decades ago—and they’ve been putting their money where their future is ever since.
In the most recent Union Budget, the Indian government earmarked ₹20,000 crore for the Ministry of Science and Technology, a figure aimed at bolstering research and innovation. While this might seem substantial at first glance, it represents just around 0.64% of the country’s GDP. That’s far below the global average and pales in comparison to the investments made by major economic powers.
To understand the gap, one only has to look at how much developed countries are investing in R&D:
- Israel dedicates a staggering 6.3% of its GDP to R&D. A large chunk comes from its private sector, fueling a vibrant startup ecosystem and a reputation for cutting-edge innovation.
- South Korea spends 5.0% of its GDP, with a clear focus on industries like semiconductors, electronics, and automotive engineering.
- Taiwan, allocating 4.0% of its GDP, has positioned itself as a global hub for semiconductor manufacturing, thanks to sustained R&D efforts.
- Sweden commits 3.6%, benefiting from close cooperation between academia, industry, and government—especially in fields like green tech and healthcare.
- The United States, with a massive spend of over $823 billion annually, channels about 3.4% of its GDP into research. Its investments span across defense, medicine, energy, and space exploration.
- Japan also invests 3.4%, with an emphasis on robotics, automotive innovation, and manufacturing excellence rooted in a culture of meticulous research.
Why R&D Should Be a National Priority for India
For a country like India that aims to be a global power, ramping up R&D isn’t just a nice-to-have—it’s a necessity. Here’s what’s at stake. Innovation at Scale: India has unique challenges that require uniquely Indian solutions. Robust R&D can help invent tools and technologies tailored to our needs. Economic Growth: Research drives industry. New products and ideas can spark entire sectors, create jobs, and contribute to a stronger GDP. Technological Independence: Instead of relying on foreign countries for advanced tech, India can develop its own capabilities and reduce strategic vulnerabilities. Problem-Solving for Society: Whether it’s tackling climate change, improving healthcare, or enhancing energy security, science and research can provide answers that are both scalable and sustainable. Global Influence: Scientific leadership translates to geopolitical influence. The countries that lead in tech often shape global norms and agendas.
how India can manage money for R&D
1. Reprioritizing Budget Allocation
India can manage more funds for research and development by carefully adjusting its current budget priorities. A large part of the national budget is spent on subsidies, welfare schemes, and administrative costs. By reviewing and reducing unnecessary or overlapping schemes, the government can free up money for R&D. Even a small percentage shift from non-productive areas to innovation can bring major long-term benefits. This approach does not require new taxes, just better use of existing resources.
2. Encouraging Public-Private Partnerships (PPP)
India should promote greater cooperation between government research institutes and private companies. By offering tax incentives, grants, or low-interest loans, the government can motivate private industries to invest more in innovation and technology. Countries like South Korea have successfully adopted this model, with a large portion of their R&D being funded by private companies. This would reduce pressure on public funds while boosting research outcomes.
3. Monetizing Strategic Assets
Another way India can raise funds for R&D is by monetizing or partially selling public sector assets that are underperforming or not essential. Strategic disinvestment in certain public sector units (PSUs) can generate large sums of money. The government can decide to dedicate a fixed share of the earnings from such disinvestments to a national R&D fund. This ensures that short-term revenue gains contribute to long-term development goals.
4. Creating a National Innovation Fund
India can also set up a dedicated National Innovation Fund to support cutting-edge research in science, healthcare, energy, and defense. Contributions to this fund can come from multiple sources like government allocations, state contributions, CSR funds from large corporations, and even foreign partnerships. This fund can help support high-risk, high-impact research projects that may not be attractive to private investors but are important for the nation’s progress.
5. Reforming Tax Policy to Support R&D
The government can introduce or improve tax benefits for companies that spend on research and development. Businesses should be allowed to deduct a higher percentage of their R&D expenses from their taxable income. This will encourage companies, especially in technology and pharmaceuticals, to invest more in innovation. Clear, transparent tax policies can attract not just Indian firms but also foreign companies to conduct R&D activities in India.
6. Involving State Governments
While central funding is important, state governments also have a key role to play. States with strong educational institutions and industrial bases can set up local R&D hubs or clusters with financial support. The Centre can offer incentives to states that invest in innovation, ensuring regional balance and faster growth at the grassroots level.
What India Needs to Build a Strong R&D Culture
Creating a robust R&D ecosystem isn’t just about money—though more funding is certainly needed. It’s also about building a supportive environment for innovation:
- Increased and consistent funding from both public and private sectors
- State-of-the-art infrastructure for labs, institutions, and startups
- Policy frameworks that encourage research and protect intellectual property
- Strong partnerships between universities, industries, and government bodies
- Career incentives to attract and retain top scientific talent
A Simple Question If Not Now, Then When?
India has shown that it can mobilize massive budgets—be it for infrastructure, digital transformation, defense modernization, or social welfare programs. These investments are all important, no doubt. But the critical question remains: if we can spend billions elsewhere, why not significantly increase our investment in R&D?
Research and Development is not just another item on the budget—it’s the bedrock of a self-reliant, future-ready India. It’s the lever that can lift the nation to new heights across economics, defense, technology, and sustainability.
India doesn’t lack talent. Nor does it lack ambition. What’s needed now is clear-eyed commitment and bold vision. If we act decisively, there’s no reason why India can’t be counted among the world’s innovation leaders—setting the pace, rather than catching up.
