GS Paper 3
Syllabus: Indian Economy, development and employment
Context: The article highlights the need for in-house Research and Development
Status of R&D:
- World invests a little over 2% of gross domestic product (GDP) in R&D (around $2 trillion)
- Top five countries in R&D: US, China, Japan, Germany and South Korea (they combined to account for three-quarters)
- Top five industries: Pharmaceuticals, automobiles, technology hardware, software and electronics (they together account for almost 73% of all industrial R&D)
- India is the world’s fifth-largest economy. But in total R&D investment, India ranked 16th, below Israel.
- Indian firms invest 3% of GDP in in-house R&D, compared to a world average of 1.5%.
- The European Commission report stated that India has only 24 firms among the top 2,500 investors in R&D worldwide.
Reasons for low industrial R&D investment in India:
- India’s limited presence in top sectors: India has no firms in five of the 10 top industrial sectors such as technology hardware, electronic equipment, etc.
- Firms don’t invest enough: India’s top-ranked R&D investment firm is Tata Motors with an annual R&D spend of $3.5 billion But at the global level, it stands only at the 58th position.
- Smaller sizes and lower technology levels of Indian firms: Indian software firms are service firms to the world’s product firms.
- India’s top 10 software firms invest only 1% in R&D compared to 8% in China.
- Setting up Research Parks and Technology Business Incubators (TBIs)
- Providing tax incentives and a negative list of imports (esp. in the defence sector) for promoting R&D activities
- Technology partnership/ Transfer of technologyg. in the Space and defence sector
- Setting up Innovation Clusters
- National Research Foundation: To fund competitive, peer-reviewed grant proposals from universities, colleges, and institutions of higher learning.
- IMPRINT initiative: To provide solutions in 10 selected technology domains.
- Atal Tinkering Labs: It aims to foster curiosity, creativity and imagination in young minds; and inculcate skills such as design mindset, computational thinking, adaptive learning etc.
- IPR Laws: India is a signatory to TRIPS and has enacted its domestic IPR laws to foster IPR creation and curtail its violation.
- Institutional Changes: India needs to drive change in industrial structure, use trade policy to force competition between Indian firms, and drastically reform India’s public research system.
- A minimum percentage of the turnover of the company may be invested in R&D by medium and large enterprises registered in India.
- Creating 30 dedicated R&D Exports Hub(by Economic Advisory Council to the Prime Minister (EAC-PM))
- Utilise talents of youth: Out of 100 top forms in R&D, over two-thirds of them have R&D centres in India. Hence, India should train and expose fresh engineers
- Line ministries at the Centre could be mandated to allocate a certain percentage of their budget for research and innovation
India should target to reach at least 2% of the Gross Domestic Product (GDP) from the current about 0.7% (Economic Survey 2020-21)