Opinion In India, a turning point for innovation
The country is embracing the idea of shifting public money into private universities and firms that produce cutting-edge research. This makes for greater bang for the taxpayer’s buck.
When a private firm is working in an area (for example, an automobile component firm that's challenged to produce ball bearings of a superior spec), it will try to do the research well, because it also has a direct interest in the knowledge sought to be produced. (Illustration by C R Sasikumar) 
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From the outset, the dreamers for India had placed a high value upon science, technology, and scientific temper. The first phase of this was centred around the Indian state. Previously private organisations, such as Tata Institute of Fundamental Research (TIFR) or Bhabha Atomic Research Centre (BARC), were brought under the fold of the government. And, for some time, this delivered good results, such as the nuclear test of 1974.
Gradually, we have started seeing the problem of innovation policy (or S&T policy, as it was called in earlier decades) in a more comprehensive, all-of-society way. What we really require is intellectual capabilities in people, in firms, and not just in standalone government organisations. Intellectual power in Indian firms is a precondition for a high GDP. This is where comprehensive national power comes from. It is not enough to have engineers in ISRO who put a craft on the moon. Those engineers should be in universities and private organisations so that this level of imagination, ambition and knowledge is applied pervasively in society.
In France, defence research is funded by the government and happens in private defence firms. In the US, 80 per cent of NASA’s budget is contracted out to private firms and universities. NASA does not make spacecraft: Private vendors do. The Jet Propulsion Laboratory (JPL) plays a critical role in NASA’s exploration of the solar system. It will come as a surprise to many to realise that JPL was created in a private university (Caltech) in 1936. From 1954 onwards, it has been the recipient of contracts and resources from NASA for its operational role in NASA’s space exploration. The recent accomplishment of Deepseek in China shows how innovative energy comes about in a country: The (private) team that created DeepSeek cut their teeth in computer science doing algorithmic trading.
Indians feel a sense of pride when their money is used in ISRO to place a craft on the moon. There will be higher levels of societal gains when knowledge resides in private organisations, and feeds into society.
In December 2024, the three of us wrote a paper on the foundations of science policy in India (https://bit.ly/xkdr_MST_2024). We utilised knowledge from public economics to clarify the intellectual foundations of science policy. We suggested there were big gains in placing taxpayer resources into private firms and universities. And we utilised knowledge from public administration and law to sketch details of implementation, of how to do this contracting-out in the Indian context.
There is a natural connection between risk in research, and contracting out to private persons. Government can contract out the same research problem to multiple implementers who take different pathways. Some pathways would fare poorly, and the flow of money into them would be stopped. Such unfolding of risk is harder when laboratories and bureaucracies are built in government organisations.
When a private firm is working in an area (for example, an automobile component firm that’s challenged to produce ball bearings of a superior spec), it will try to do the research well, because it also has a direct interest in the knowledge sought to be produced. Such a firm would bring knowledge from its normal operations into the contracted research; it would care deeply about the work and execute it well, and then the knowledge produced through the publicly funded research would spillover into its economic success.
Many in Indian science policy have, of course, been thinking on similar lines. The paradigm shift has been simmering for years. We are at a remarkable moment where the new paradigm is turning into action. An important new organisation, Anusandhan National Research Foundation (ANRF), will put out grants at about Rs 2,800 crore a year through new ways. It is likely to break new ground in getting public money to private organisations that will fund early stage research.
Paragraph 79 of the recent budget speech reads: “To implement private sector driven research, development and innovation initiative announced in the July budget, I am now allocating Rs 20,000 crore.” This is an important milestone in the history of Indian science policy.
An article in the Financial Times on February 2 says that ISRO will buy launch vehicles made by private persons. Taxpayer money will go to private firms who will do cutting-edge engineering, and the knowledge will feed into civilian applications and global competitiveness.
In recent years, the Ministry of Electronics and Information Technology (MEITY) has worked on using public funding to get more GPUs into private hands, to deepen AI knowledge in India. In the olden days, taxpayer money would have gone into a government organisation (for example an IIT), and the equipment would have been used by state functionaries. Instead, MEITY has aligned with the new paradigm. They have procured 18,693 GPUs, which will be in operation at multiple private IT infrastructure firms. MEITY will give the use of these GPUs to researchers in Indian private organisations at the price of $1 per hour. This is the philosophy of buy, not make.
Putting these four developments together, we may cautiously say that 2025 will shape up as an important turning point for Indian science policy. The Indian state is rising out of the concept of using public money to hire researchers who are civil servants, to the concept of delivering public money into private universities and firms where cutting-edge knowledge is produced. This is greater bang for the taxpayer’s buck, as opposed to vertical government science organisations.
The broad idea of contracting out public resources for R&D to private persons is increasingly accepted. How would the implementation work? Research funding is not like ordinary purchasing of (say) pencils where contract performance can be readily tested and audited. As the old saying goes, “If there is no possibility of failure, it’s not research.” The puzzle now lies in developing these new ways. Our paper shows the elements of work required: Changes in legal texts; new versus existing organisations; strategic thinking in public finance; and project planning for the required reforms.
Mashelkar is president, Pune International Centre, Thomas and Shah are co-founders at XKDR Forum
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