Reviving India’s research and development (R&D) funding is paramount for the nation’s progress in innovation and technological advancement. Historically, India has made significant strides in various fields, from space exploration to pharmaceuticals. However, sustaining this momentum requires substantial investment in R&D. In recent years, there has been a growing recognition of the need to bolster funding for research initiatives across sectors. With increased funding, India can foster a culture of innovation, attract top talent, and address pressing societal challenges while positioning itself as a global leader in science and technology.
Tags:GS-3-Indigenization of Technology- IT& Computers- Space Technology- Robotics- Artificial Intelligence, GS Paper – 2 Government Policies & Interventions
For Prelims: Science and Engineering Research Board of India, Climate Change, GDP, National Research Foundation, Deep Tech Startups, Deep Tech, Artificial Intelligence, Machine Learning, Internet of Things, Big Data, Quantum Computing.
For Mains: Sustainable Funding for Scientific Growth, Issues of inadequate Private Sector Involvement in R & D.
Context:
- India’s research and development (R&D) sector has experienced notable growth, marked by a substantial rise in Gross Expenditure on Research and Development (GERD).
- This gap is primarily attributed to India’s comparatively low investment in R&D as a percentage of its GDP.
- The announcement in the interim Budget for 2024-25, of a corpus of Rs 1 lakh crore to bolster the research and innovation ecosystem within the country, has sparked enthusiasm within the scientific and research communities.
What Are the Different Positive Aspects of R&D Funding in India?
- Powerhouse in Producing Academic Talent:
- Annually, India generates an impressive 40,813 PhDs, ranking third globally after the United States and China. This reflects India’s commitment to fostering intellectual capital and contributing significantly to global research endeavours.
- Additionally, India’s research output remains substantial, ranking third globally with over 3,00,000 publications in 2022.
- Commendable Performance in Patent Grants:
- India demonstrates commendable performance in patent grants, securing the sixth position globally with 30,490 patents granted in 2022.
- While this figure is lower compared to the U.S. and China, it underscores India’s evolving innovation landscape and its potential for further growth in intellectual property creation.
- Emphasis on Autonomous R&D Laboratories and Institutions:
- According to the R&D statistics (2022-23) of the Department of Science and Technology, India’s total investment in R&D reached USD17.2 billion in 2020-21.
- Within this sum, 54% (USD 9.4 billion) is allocated to the government sector and predominantly utilised by four key scientific agencies:
- The Defence Research and Development Organisation (DRDO) (30.7%)
- The Department of Space (18.4%)
- The Indian Council of Agricultural Research (ICAR) (12.4%)
- The Department of Atomic Energy (11.4%)
- Provisions in Interim Budget 2024-25:
- A corpus of Rs.1 lakh crore to be established with a fifty-year interest-free loan to provide long-term financing or refinancing with long tenors and low or nil interest rates.
- A new scheme to be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atma nirbharta’ is also mooted.
What Are the Different Concerns in R&D Funding in India?
- Low R&D Investment as Percentage of GDP:
- India’s R&D sector is experiencing significant growth, evidenced by a notable increase in Gross Expenditure on Research and Development (GERD) from Rs 6,01,968 million in 2010-11 to Rs 12,73,810 million in 2020-21.
- However, despite this growth, India’s R&D investment as a percentage of Gross Domestic Product (GDP) remains low at 0.64%.
- This places India behind major developed and emerging economies such as China (2.4%), Germany (3.1%), South Korea (4.8%), and the United States (3.5%).
Less Contribution by the Private Sector:
- In India, the Gross Expenditure on Research and Development (GERD) is primarily driven by the government sector, including the central government (43.7%), State governments (6.7%), Higher Education Institutions (HEIs) (8.8%), and the public sector industry (4.4%), with the private sector industry contributing only 36.4% during 2020–21.
- The reasons for this disparity, despite the government’s recognition of the need for increased R&D spending, are not clear. It may stem from a lack of coordination between government agencies and a need for stronger political will to prioritise R&D expenses.
Private Sector Contribution in Developed Economies:
- Indian businesses contribute approximately USD 6.2 billion, representing 37% of the country’s GERD, in contrast to the global trend where business enterprises typically contribute over 65% of R&D.
- In leading innovative economies such as China, Japan, South Korea, and the U.S., a significant portion (>70%) of R&D funding comes from private industries, driven by market forces and profit motives. The actual R&D activities are often conducted in Higher Educational Institutions (HEIs).
Under-Utilisation of Allocated Funds:
- In 2022-2023, the Department of Biotechnology (DBT) used only 72% of its estimated budget allocation on Centrally Sponsored Schemes (CSSs)/Projects, while the DST used only 61%.
- The Department of Scientific and Industrial Research (DSIR), which receives the lowest allocation for CSSs, spent 69% of its allocation.
- The reasons for under-utilisation, as with the under-allocation, are unclear and may indicate tedious bureaucratic processes for approving disbursements,
- A lack of capacity to evaluate projects or clear utilisation certificates.
- A lack of prioritisation for science funding by the Ministry of Finance.
- inadequate planning or implementation strategy for the requested funds by the Ministry of Science and Technology.
State Governments not Allocating Adequate Funds:
- The RBI’s report, “State Finances: A Study of Budgets of 2023-24,” included a section devoted to the research and development (R&D) spending of State governments.
- The study covered only 10 out of 36 States and Union Territories, indicating that research is not a priority for most States.
- The annual spending on research was also quite small in most States, averaging 0.09% of the Gross State Domestic Product (GSDP). However, Rajasthan emerged as an outlier in this regard.
What are the Various Steps Needed to Enhance R&D Funding in India?
- Encouraging Private Sector Collaboration:
- India’s R&D ecosystem boasts efficiency but could further benefit from robust private sector involvement and enhanced industry-academia collaboration, promoting knowledge transfer and fostering innovation.
- The 2013 Science, Technology, and Innovation Policy highlighted the national goal of increasing Gross Expenditure on R&D (GERD) to 2% of GDP, a sentiment reiterated in the 2017-2018 Economic Survey’s chapter on science and technology transformation.
- Incentivizing private investment through measures such as relaxing foreign direct investment (FDI) regulations, offering tax incentives, and providing clear regulatory pathways for products can bolster investor confidence.
- Increasing R&D Expenditure as Percentage of GDP:
- Research and innovation are pivotal for economic growth, technological advancement, and global competitiveness. However, India’s current R&D funding landscape and resulting output warrant evaluation.
- In 2021, OECD member countries allocated an average of 2.7% of GDP to R&D. Over the past decade, the U.S. and the U.K. have consistently spent over 2% of GDP on R&D.
- Experts advocate for India to allocate at least 1%, preferably 3%, of its GDP annually until 2047 to R&D to significantly impact development through scientific advancements.
Ensuring the Increased Role for HEIs in India:
- HEIs in India currently play a relatively minor role in overall R&D investment, contributing 8.8% (USD 1.5 billion).
- Addressing this issue requires a nuanced approach, as increasing industry participation in R&D is multifaceted and lacks a singular solution.
- A comprehensive strategy involving various stakeholders is essential to tackle challenges and unleash R&D potential for India’s economic growth and competitiveness through HEIs.
Bridging the Gaps Between India’s Manufacturing Reality and Aspirations:
- Initiatives like the National Deep Tech Startup Policy (NDTSP) demonstrate a strong commitment to technological progress and innovation, potentially incentivizing private sector engagement in India’s R&D ecosystem.
- Despite the considerable time and technical challenges involved in Deep Tech innovation, allocating resources to protect intellectual property and address technical hurdles can unlock new markets.
- The recent enactment of the Anusandhan National Research Foundation (ANRF) Act, 2023 underscores the government’s commitment to catalysing research and innovation as the cornerstone of development.
- This legislative move will enhance scientific research nationwide, aiming to bridge India’s persistent R&D investment gap while fostering a robust research culture within HEIs.
- However, this initiative must overcome challenges such as ensuring equitable fund distribution, promoting interdisciplinary collaborations, and upholding global standards.
Mandating Proper Utilisation of Allocated Funds:
- The Union Ministry of Science and Technology has consistently underutilised its budget. Strengthening budget utilisation is crucial alongside calls for increased funding through both government and private sources.
- Mitigating under-spending and underutilization of funds earmarked for R&D are vital initial steps, requiring political prioritisation of R&D spending and recognition of its significance in India’s growth journey.
- Furthermore, India needs bureaucratic capacity to evaluate and monitor science projects post-allocation, a prerequisite for India’s goal to become a scientific powerhouse by 2047.
Prioritising Expenditure Through State Governments:
- Public sector R&D expenses, particularly at the State level, need to increase to enhance research facility quality at State universities. This improvement is tied to researchers’ freedom to address locally relevant issues.
- Increased expenditure is also necessary to alleviate the bottleneck preventing research from transitioning from the lab to the factory floor. Innovation’s value is limited without this transition, restricting advancements to lower quality.
Conclusion:
Hence, government efforts aim to boost R&D spending in India, guiding research, innovation, and entrepreneurship while promoting private sector engagement. Despite significant growth, India’s low R&D investment as a percentage of GDP compared to major economies is concerning. The interim Budget, 2024-25, along with initiatives like NDTSP and ANRF Act, 2023, signal India’s commitment to incentivizing private sector-led research and innovation.
UPSC Civil Services Examination Previous Year Question (PYQ)
Prelims:
Q.1 Which of the following statements is/are correct regarding National Innovation Foundation-India (NIF)? (2015)
- NIF is an autonomous body of the Department of Science and Technology under the Central Government.
- NIF is an initiative to strengthen the highly advanced scientific research in India’s premier scientific institutions in collaboration with highly advanced foreign scientific institutions.
Select the correct answer using the code given below:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Ans: (a)
Q.2 For outstanding contribution to which one of the following fields is Shanti Swarup Bhatnagar Prize given? (2009)
- Literature
- Performing Arts
- Science
- Social Service
Ans: (c)
Q.3 Atal Innovation Mission is set up under the (2019)
- Department of Science and Technology
- Ministry of Labour and Employment
- NITI Aayog
- Ministry of Skill Development and Entrepreneurship
Ans: (c)
Source: (TH)
FAQs
Q1: Why is reviving India’s R&D funding crucial?
A1: Reviving India’s R&D funding is crucial because it fosters innovation, drives economic growth, and enhances competitiveness on a global scale. It enables the country to develop cutting-edge technologies, address societal challenges, and create high-value jobs.
Q2: How has India’s R&D funding landscape evolved in recent years?
A2: India’s R&D funding landscape has seen improvements, but challenges remain. While government initiatives like the Atal Innovation Mission and increased public-private partnerships have bolstered funding, there’s still a gap in overall investment compared to global leaders. Private sector contributions need encouragement to match public funding efforts.
Q3: What are the primary obstacles hindering India’s R&D funding growth?
A3: Several obstacles impede India’s R&D funding growth, including bureaucratic red tape, a lack of risk capital availability, insufficient industry-academia collaboration, and limited incentives for private sector investment in research. Addressing these challenges requires comprehensive policy reforms and a conducive ecosystem for innovation.
Q4: How can India incentivize private sector investment in R&D?
A4: India can incentivize private sector investment in R&D through measures such as tax incentives, R&D grants, intellectual property protection, and fostering a culture of innovation within corporations. Public-private partnerships can also facilitate knowledge exchange and resource sharing, enhancing R&D outcomes.
Q5: What strategies should India adopt to enhance R&D funding sustainability?
A5: To enhance R&D funding sustainability, India should prioritize long-term investment in science and technology, streamline regulatory processes to facilitate innovation, allocate a higher percentage of GDP to R&D, and promote interdisciplinary research collaborations. Additionally, fostering a supportive ecosystem for startups and SMEs can drive innovation and attract investment.
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