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Thursday, March 04, 2021

CEA: Need thrust from businesses, ‘reliance on jugaad’ hurts innovation

For India to scale up and match the level of the top 10 economies in terms of the expenditure on R&D, the private sector in the country needs to increase spends from 37 per cent to 68 per cent, said Chief Economic Adviser Krishnamurthy V Subramanian.

By: ENS Economic Bureau | New Delhi |
Updated: January 30, 2021 1:07:03 am
CEA, Chief Economic Adviser, Private sector spending, jugaad innovation, Krishnamurthy V Subramanian, economy news, Indian express newsChief Economic Adviser Krishnamurthy V Subramanian

India’s private sector needs to step up its expenditure in research and development (R&D) as well as innovation to compete with the top 10 economies of the world, the country’s Chief Economic Adviser (CEA), Krishnamurthy V Subramanian, said in the Economic Survey for 2020-21.

“Mere reliance on ‘jugaad innovation’ risks missing the crucial opportunity to innovate our way into the future. This requires a major thrust on R&D by the business sector. India’s resident firms must increase their share in total patents to a level commensurate to our status as the fifth-largest economy in current US dollar,” Subramanian noted.

For India to scale up and match the level of the top 10 economies in terms of the expenditure on R&D, the private sector in the country needs to increase spends from 37 per cent to 68 per cent, the CEA said. The country’s gross expenditure on R&D for 2020-21 stood at 0.65 per cent of Gross Domestic Product (GDP), which was less than one-third of the funds spent by top 10 economies of the world, who spent between 1.5 and 3 per cent of GDP on R&D.

Of the total expenditure on R&D done in India, more than half was done by the government. Despite this, India’s gross domestic expenditure on research and development (GERD) remained low, the Economic Survey noted.

“India’s business sector needs to rise to the occasion and significantly ramp up its gross expenditure on R&D to a level commensurate to India’s status as the fifth-largest economy in GDP current US dollar. This requires boosting business sector contribution to total GERD from 37 per cent currently, to close to 68 per cent — the average business contribution in GERD of other top 10 economies,” Subramanian noted.

Apart from the necessary boost to private investment in R&D as well as innovation across various sectors, India also needs to improve its standing in the total number of patent applications filed in the country.

For example, in the current fiscal, between April and November 2020, all companies, excluding startups, filed roughly 38,000 applications, of which about 15,000 were granted.

In nearly the same period between April and October, startups in India filed 1,100 applications for patents but none were approved.

Similarly, though startups in India filed more than 3,500 applications for trademark recognition, none of them was granted approval between April and October 2020.

The number of patent and trademark applications filed by Indian startups over the past five financial years has increased, but there is a lack of corresponding approvals on both parameters, the Survey noted.

Gross spends on R&D for 2020-21

# The country’s gross expenditure on R&D for 2020-21 stood at 0.65 per cent of Gross Domestic Product (GDP), which was less than one-third of the funds spent by top 10 economies of the world

# The top 10 economies of the world spent between 1.5 and 3 per cent of GDP on R&D

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