No Development Without Research
India is one of the fastest-growing global economies, aiming to become the world's third-largest economy by 2030. To achieve this, emphasis on manufacturing and industrial growth, which, in turn, would spur employment across sectors, is imperative. The country also needs to upgrade to the latest technological tools and processes to keep pace with the growing competition, towards which increased investments are essential, especially in research and development (R&D).
Research – the Key to Innovation
Presently, R&D accounts for 0.7 per cent of India's gross domestic product (GDP). The country has also improved its ranking in R&D and information and communication technology (ICT) parameters, moving from 81st in 2015 to 40th in 2023 on the Global Innovation Index Rankings, which ranks 132 economies worldwide on various parameters. If we consider patent filings, India recorded a notable hike in 2022, marking a 31.6 per cent increase, which underpins the country's innovation acumen.
However, although India spends significantly on a global scale, the country's contribution towards R&D as a percentage of its GDP lags behind the recommended figure of 1.8 per cent. Moreover, despite an improvement in the overall ranking, it continues to fall behind nations such as the US, Germany, China and Japan in research, development and technological advancement. This could be a spoke in the country's growth wheel. The need, therefore, is to increase the outlay on R&D to unlock the potential benefits of innovative and new-age advancements.
Challenges Galore
There is an urgent need for a change in attitude towards research across the board, including the private sector, which has taken a conservative stance when it comes to spending on research. Over the last ten years, of over Rs 651 trillion invested by private players, not even one per cent was spent towards R&D. In fact, over 80 per cent of the funds that had been initially allocated for R&D were diverted to meet recurring expenses such as salaries and other maintenance. This pattern persisted for a decade, with recurring expenses on R&D as a percentage of net sales at 0.3 per cent in FY23, slightly down from 0.4 per cent in FY19.
Apart from investments, a lack of infrastructure and a skilled workforce pose challenges to R&D initiatives. A shortage of rewarding opportunities in this segment is also responsible for brain drain.
Intellectual property laws have not yet been fully developed on the policy front to meet the challenges of modern-day piracy and duplication. Government initiatives are essential to bolster India's R&D presence globally, and efforts are underway to achieve this goal. The government highlighted this commitment in the Interim Budget 2024, which prioritised R&D initiatives. Moreover, there needs to be increased collaboration between various stakeholders across the industry, academia and researchers to ensure that knowledge in research laboratories is applied to end-products.
Way Forward
To achieve the goal of greater and more intense R&D, there needs to be increased participation from the private players as well as other industry stakeholders, along with the Indian Government.
On the policy front, the government needs to do a lot more. Firstly, there is a crucial need for clarity and alignment regarding research priorities, sectors, and the entities responsible for conducting research. As a part of this clarity, the government needs to step back from too much control and instead needs to create an environment in which R&D can flourish. India's scientific institutions possess the potential to lead in numerous research domains, and this potential should be harnessed by encouraging global companies and institutions to establish R&D centres within the country. Secondly, attention is to be given to intellectual property (IP) rights, where the govt needs to strengthen the judicial system and processes of the journey of IP. Increased issuance of IP within India will bolster the country's R&D capabilities. Thirdly, regulators in India must expedite the process of creating the policies needed to strengthen the clinical trials processes, streamline approval procedures and build a conducive environment to enhance the country's overall competitiveness on the global stage. Finally, the industry and the government need to counter the overwhelming challenge of scientific talent shortage through various trainings, skill development and upskilling programmes. The problem of substandard and counterfeit products needs to be tackled proactively through new-age technologies such as blockchain and data analytics.
Only through a strategic and collaborative approach between the government and various industry stakeholders can India carve a niche in the global innovation ecosystem and emerge as a hub for innovation.
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