Rethinking Research and Development in India: Challenges and Pathways to Renewal

Research and Development (R&D) is the backbone of innovation-led growth. Countries that have consistently invested in R&D—such as the United States, Germany, Japan, South Korea, and now China—have reaped the benefits of technological leadership, economic competitiveness, and strategic autonomy.

India, despite being the world’s fifth-largest economy and a hub of engineering and scientific talent, has long underinvested in R&D. While Indian enterprises thrive in software services, pharmaceuticals, and frugal innovation, systemic weaknesses continue to limit the country’s ability to move up the global technology ladder.

This article explores the historical, social, and economic dimensions of India’s R&D challenge and offers a roadmap for boosting innovation.

Historical Context: A Legacy of Gaps

Early Foundations

Post-independence India invested heavily in creating scientific institutions: the Council of Scientific and Industrial Research (CSIR), Indian Space Research Organisation (ISRO), Defence Research and Development Organisation (DRDO), and a chain of IITs and universities. These investments delivered successes—from space missions to nuclear capabilities.

However, this system was largely state-driven. Industrial R&D was weak, and private sector involvement in innovation remained minimal.

Liberalisation and Globalisation (1991–2000s)

The economic reforms of 1991 shifted India towards a market-driven model. While manufacturing struggled to expand, services—especially IT—boomed. Indian companies excelled in process-driven outsourcing but lagged in original product innovation.

This period also revealed a structural imbalance: while public research labs dominated basic science, industry had little incentive to invest in long-term R&D due to regulatory uncertainty, small domestic markets for advanced products, and limited venture capital.

The China Comparison

China, by contrast, systematically increased R&D spending to over 2.4% of GDP, building global champions in telecom, EVs, and AI. India’s spending, by contrast, stagnated at 0.6–0.7% of GDP, well below the global average of 1.8–2.0%.

Social and Cultural Dimensions

Education and Research Disconnect

Indian higher education emphasizes exams, rote learning, and degrees, but not critical thinking or innovation. Universities produce a large number of engineers and graduates, but research output in terms of patents, publications, and global rankings remains limited.

Risk Aversion

Culturally, India has tended to prize stable careers in government or established firms over entrepreneurial or research-intensive paths. Failure is stigmatised, which dampens the spirit of experimentation.

Brain Drain

Talented Indian researchers have often migrated abroad due to better funding, labs, and career prospects. While recent years have seen some reverse migration, the “brain drain” legacy continues to shape India’s R&D deficit.

Economic and Institutional Barriers

Underfunding of R&D

• India spends 0.7% of GDP on R&D, compared to 2.8% in the US, 2.1% in China, and 4%+ in South Korea and Israel.
• Over 60% of this spending is by the government, whereas in advanced economies, industry drives over 70% of R&D.

Weak Industry–Academia Linkages

Research institutions and industry often work in silos. Universities lack incentives to commercialise research, while industry prefers to import or license technology rather than fund indigenous research.

Fragmented Institutional Ecosystem

Multiple agencies fund R&D with overlapping mandates. Coordination is weak, leading to duplication and under-utilisation of resources.

Limited Private Sector Investment

Indian firms underinvest in R&D compared to global peers. For example, Samsung alone spends more on R&D than all of India’s top private sector firms combined.

Emerging Bright Spots

Despite challenges, there are areas of progress: India is a global leader in generics, and firms like Dr. Reddy’s and Sun Pharma have increased R&D spending on new drugs and biosimilars. ISRO’s Mars mission proved world-class capability by becoming first country to reach Mars on first try. Chandrayaan 1 proved the presence of water ice on the moon and Chandrayaan 3 made India to first country to land on the Moon’s South pole. There are 100s of space startups in India developing and manufacturing various space-related items, including satellites and launch vehicles.

Startups are innovating in drones, electric vehicles, defence, AI, fintech, healthtech, and agritech. Atal Innovation Mission has reached millions of students with tinkering labs, planting seeds of an innovation culture. UPI has emerged as the world’s largest payment system, successfully handling 18 billion payments a month. Digital India has emerged as a global role model for how to improve the efficiency and transparency of governance using modern technologies.

Roadmap: Boosting India’s R&D

• Increase Public Investment: India must raise R&D spending to at least 1.5% of GDP by 2030 with a clear roadmap. Priority should be given to strategic sectors like semiconductors, clean energy, AI, biotech, and defence.
• Incentivise Private R&D: Offer tax credits and matching grants for private R&D. Create sectoral R&D funds where government and industry co-invest. Use public procurement to reward indigenous innovation. Defence industrial production has seen 3000% growth in the last 10 years, thanks to the government prioritising Make in India and Designed in India in procurement.
• Strengthen Academia–Industry Collaboration: Establish Technology Transfer Offices in universities. Promote industry and government-sponsored PhDs in strategic sectors and research chairs. Expand models like IIT-industry incubators nationwide. Create financial incentives for colleges and staff to seek out and create increased industry collaboration.
• Reform Higher Education: Encourage interdisciplinary research rather than siloed departments. Provide students and academia with patenting. Reward faculty not just for publications, but for patents and societal impact. Promote entrepreneurship education and tolerance of failure.
• Attract and Retain Talent: Provide competitive grants and labs to retain top researchers. Encourage diaspora scientists to collaborate through visiting professorships and joint labs. Strengthen career pathways for young researchers with transparent recruitment and tenure systems.
• Global Collaboration: Join international R&D consortia in areas like climate tech, vaccines, and AI governance. Position India as a knowledge partner in the Global South, building South–South research partnerships.

Conclusion

India’s demographic dividend, digital infrastructure, and startup ecosystem provide fertile ground for innovation. But without bold investment and systemic reform, India risks remaining dependent on foreign technologies. Building a strong R&D culture requires funding, coordination, and social acceptance of risk and experimentation. If achieved, India could emerge not just as an economic powerhouse, but as a knowledge superpower driving innovation globally.