Print Friendly, PDF & Email

R&D: An inside job

GS Paper 3

 Syllabus: Indian Economy, development and employment


Source: BS 

Context: The article highlights the need for in-house Research and Development


Status of R&D:

  • Global:
    • 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:
    • 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.


Measures taken:

  • 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.


Measures needed: 

  • 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)


Insta Links:

R&D ecosystem in India


Prelims Links:

What is the aim of the programme ‘Unnat Bharat Abhiyan’? (UPSC 2017)


(a) Achieving 100% literacy by promoting collaboration between voluntary organizations and the government’s education system and local communities.

(b) Connecting institutions of higher education with local communities to address development challenges through appropriate technologies.

(c) Strengthening India’s scientific research institutions in order to make India a scientific and technological power.

(d) Developing human capital by allocating special funds for health care and education of rural and urban poor, and organizing skill development programmes and vocational training for them.


Answer: B