India's R&D funding

SYLLABUS

GS 3 >> Science and Technology >> Research and innovation

REFERENCE NEWS

India’s R&D funding landscape is undergoing significant transformation with the announcement of a ?1 lakh crore corpus in the interim Budget for 2024-25, aimed at bolstering research and innovation.

STATUS OF INDIA IN THE R&D LANDSCAPE:

1. Funding:  India’s allocation to R&D as a percentage of  GDP, stands at 0.64%.
2. Growth in GERD: India’s Gross Expenditure on Research and Development (GERD) has shown significant growth, reaching over USD 17 billion in 2020-21, but it still lags behind major economies in terms of the percentage of GDP spent on R&D.
3. Academic Talent Production: India ranks third globally in producing PhDs and publications, reflecting a commitment to fostering intellectual capital and contributing to global research endeavors.
4. Patent Grants: India ranks sixth globally in patent grants, showcasing an evolving innovation landscape and potential for further growth in intellectual property creation.
5. Investment in Autonomous R&D: A significant portion of R&D funding is allocated to autonomous laboratories operated by the government, driving research and technology development with strategic implications.
6. Government Sector Dominance: With 54% of total R&D investment allocated to the government sector, key scientific agencies like DRDO, Department of Space, ICAR, and Department of Atomic Energy benefit, enhancing strategic research and development initiatives.
7. Provisions in Interim Budget 2024-25: The interim budget allocated a corpus of Rs. 1 lakh crore for long-term financing or refinancing in R&D, along with launching a new scheme to strengthen deep-tech technologies for defence purposes, promoting self-reliance (atmanirbharta).

CONCERNS IN R&D FUNDING IN INDIA

1. Low R&D Investment as Percentage of GDP:

• India’s R&D is witnessing significant growth, with 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, with R&D investment as a percentage of Gross Domestic Product (GDP) standing at 0.64%, India falls behind major developed and emerging economies such as China (2.4%), Germany (3.1%), South Korea (4.8%) and the United States (3.5%).

1. Less Contribution by Private Sector:

• In India, 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 the reduction in R&D spending despite the government being cognizant of the need to increase it are not clear, but may stem from a lack of coordination between government agencies and a need for stronger political will to prioritise R&D expenses.
• In leading innovative economies such as China, Japan, South Korea, and the U.S., a significant portion (>70%) of R&D funding is from private industries, driven by market forces and profit motives, and the actual R&D activities are conducted in the Higher Educational Institutions (HEIs).

1. 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, lack of capacity to evaluate projects or clear utilisation certificates, lack of prioritisation for science funding by the Ministry of Finance or inadequate planning or implementation strategy for the requested funds by the Ministry of Science and Technology.

1. State Governments not Allocating Adequate Funds:

• The RBI’s report, State Finances: A Study of Budgets of 2023-24, had a section devoted to the R&D spending of the State governments. The study covered only 10 out of 36 States and Union Territories implying that research is not a priority for most States. The annual spending on research was also quite small in most States (0.09% of the GSDP on average), though Rajasthan emerged an outlier.

WAY FORWARD

• Fostering Collaboration with the Private Sector:Initiatives need to be in place to encourage private sector investments by easing regulations on foreign direct investments, offering tax incentives, and creating transparent regulatory guidelines.
• Boosting Research and Development Funding: A target need to be set to dedicate a substantial portion of the GDP, specifically 1-3%, to research and development each year to propel development efforts forward.
• Elevating the Role of Higher Educational Institutions Highlighting the critical role that Higher Education Institutions play in research and development, there needs to be a push to enhance the research infrastructure within academia in India.
• Promoting Investment in Advanced Technology Policies such as the National Deep Tech Startup Policy and the Anusandhan National Research Foundation Act needs to be strengthened to stimulate engagement in the private sector and ensure the protection of intellectual property rights.
• Ensuring Effective Use of Research Funds :A focus on political dedication to research funding coupled with efforts is required to build administrative expertise for the evaluation and application of research projects.
• Directing State Government Spending Towards Innovation :The strategy includes directing funding through state governments to enable the progression of research initiatives from the theoretical stage to practical, industrial applications.
• Establishing a Supportive Regulatory Framework for Research There needs to be a concerted effort to create a regulatory environment that is fair and conducive to research and development across all sectors.
• Investing in Workforce Skills and Education There needs to be an emphasis on investment in educational programs and skill development to build a workforce capable of contributing to and sustaining the growth of the private sector.
   

The interim Budget, 2024-25 combined with the NDTSP and ANRF(Anusandhan National Research Foundation)Act,2023 sends positive signals regarding India’s commitment to incentivising private sector-led research and innovation, particularly in burgeoning industries. This commitment to R&D is necessary to fulfil the vision of  ‘Jai Jawan, Jai Kisan, Jai Vigyan, Jai Anusandhan’.

PRACTICE QUESTION

Q: “Discuss the current challenges facing India's research and development (R&D) landscape. Propose viable solutions to address these challenges and enhance the country's innovation ecosystem."(10M, 150W)