How India’s R&D ecosystem shapes its goal of becoming a knowledge-driven economy

India’s expenditure in R&D

India is emerging as the world’s fifth-largest economy and aims at becoming a developed nation by 2047. Nonetheless, the country’s Gross Expenditure on R&D (GERD) has remained consistently below 1% of GDP. In comparison, innovation-driven economies allocate significantly higher shares of their national output to research. For example, South Korea spends around 4.8% of its GDP on R&D, the US 3.5%, and China more than 2.4%.  

Beyond the relatively low aggregate outlay, a significant structural imbalance complicates India’s R&D spending. There is an overreliance on the public sector for R&D funding, and the part played by private capital in research is much less than that in developed nations. The central and state governments account for nearly 60% of total GERD. 

These funds are mainly utilised by state-run laboratories and strategic sectors such as defence, space, and atomic energy, including agencies like the Indian Space Research Organisation, the Defence Research and Development Organisation, the Council of Scientific and Industrial Research, and the Department of Atomic Energy. 

The private sector contributes less than 36% to India’s GERD. In more advanced economies like the US, South Korea, and Japan, private industry leads the investments in R&D, contributing between 70% to 80% of total R&D investment and ensuring that research remains closely linked to commercial market demands.

Industry-academia gap

Moreover, private-sector participation also has implications for how effectively research moves from the laboratory to the market. In order to create an R&D ecosystem that is on par with the developed world, India’s national R&D expenditure needs to ensure effective technological innovations. This requires the proper integration between academic research and industrial manufacturing. But a structural gap exists between these two domains. 

Academic institutions and public laboratories in India have traditionally prioritised basic research, scientific publications, and other metrics linked to academic progression, while market demand and commercial viability have received comparatively less attention. 

Therefore, the domestic industry has shown lower preferences for funding long-gestation, high-risk research at universities and public institutions, and has rather relied on imported technology. Bridging this gap will help ensure a more robust system of innovation, where public funds are less concentrated and broadly distributed, and private investments contribute substantially to the nation’s R&D output.

This becomes particularly important as India seeks to build indigenous capabilities in sectors that are critical not only to economic growth but also to national security and strategic autonomy.

Significance of R&D in strategic sectors

R&D serves as the primary engine of a nation’s productivity, level and quality of industrialisation, and sustained macroeconomic growth. Its significance is particularly pronounced in deep-technology sectors such as artificial intelligence, quantum computing, semiconductors, space systems, defence electronics, and advanced robotics. 

Investment in these sectors is of crucial importance for national security, technological sovereignty, long-term economic resilience, and strategic autonomy.

Unlike digital platforms or consumer software models that can scale rapidly through incremental updates on established digital infrastructure, deep-tech ventures require immense upfront capital and prolonged incubation cycles that span all Technology Readiness Levels (TRL 1 to 9). TRLs, developed by the National Aeronautics and Space Administration (NASA), measure the maturity of a technology from early lab research at TRL 1 to final market deployment at TRL 9.

Because these technologies are directly involved in critical national infrastructure, defence systems, and advanced industrial supply chains, inadequate domestic technological capacity can create structural dependence on foreign technologies and expose strategic sectors to trade bottlenecks, supply-chain disruptions, export restrictions, etc. 

In addition, building technological capabilities requires not only investment in scientific research but also effective mechanisms to translate that research into commercially viable products.  

Initiatives to bridge the gap

The government has recognised the need to strengthen the links between academic research and real application, which is evident in several initiatives, including: 

1. The Biotechnology Industry Research Assistance Council (BIRAC): Established under the Department of Biotechnology in 2012, the BIRAC functions as an interface between industry and academia to fund and empower the emerging biotech enterprise in India. It provides bio-incubators, seed funding, and grants that de-risk early-stage biotechnology commercialisation for startups and academic researchers. 

2. The Impacting Research Innovation and Technology (IMPRINT): It was designed to direct academic research toward solving engineering and technological challenges across institutions like the IITs and IISc. Under this initiative, launched jointly by the Ministry of Education and the Ministry of Science and Technology in 2015, projects are funded by various ministries and industry partners jointly to ensure clear alignment with the nation’s developmental goals.

3. The Anusandhan National Research Foundation (ANRF): It was established through an Act of Parliament (ANRF Act 2023) to undertake initiatives including seeding, growing and facilitating research at academic and research institutions.

As an apex body with a total planned allocation of Rs 50,000 crore over five years (2023–2028), the ANRF plans to raise over 70% of its outlay from non-governmental sources, industry, and philanthropic investments, ensuring increased private partnership in India’s innovations. 

Notwithstanding the concentration of funds in IITs, the ANRF’s mandate is to democratise research funding beyond tier-1 institutes through programmes like the Partnership for Accelerated Innovation and Research (PAIR). It pairs established research institutions with state public universities to increase research capacity.

The ‘valley of death’

Despite these initiatives, a persistent structural bottleneck remains in the transition from research to commercialisation. While public funding and academic grants can support proof-of-concept validation at early TRL levels (1 to 3), advancing to higher TRLs 4 to 7 – involving prototyping, pilot testing, and real-world validation, etc. – needs greater capital and industry participation. 

At this mid-stage, financial requirements increase exponentially but commercial risk remains considerable because it is not yet backed by risk-tolerant private venture capital. This results in a phenomenon referred to as the ‘valley of death’, where promising laboratory innovations fail to achieve market deployment.

Notably, this gap between technological innovation and commercialisation is also reflected in India’s patent landscape. 

India’s patent landscape

Efforts to streamline intellectual property (IP) administration, alongside awareness campaigns for patenting, have contributed to a significant jump in domestic patent filings. Domestic IP filings grew by 44%, up from 4,77,533 in 2020–21 to 6,89,991 in 2024–25. India has also emerged as a global leader in intellectual property filings and ranked as the world’s sixth-largest patent filer in 2023.

However, this increase in filing volumes has not translated into globally scaled, proprietary technologies. Experts identify three main reasons for this. 

First, the increased filing activity by universities and academic institutions is largely driven by academic incentives such as tenure rules and institutional ranking systems rather than market viability. This can result in low commercial licensing rates and dormant patent portfolios.

Second, Indian firms have largely focused their patenting activity on the domestic markets, with relatively limited international patenting. This can lead to a low conversion rate of Indian IP into high-margin, globally competitive deep-tech products. 

Thirdly, the lack of effective monetisation frameworks – such as Technology Transfer Offices (TTOs) that operate across university campuses in developed nations – and restrictive institutional policies regarding patenting can weaken incentives for faculty and student inventors to commercialise their research. 

The way forward: from research to commercialisation

Therefore, converting India’s scientific capability into commercially successful and globally competitive technologies requires structural reforms. First, research administration may move from rigid compliance to trust-based funding, streamlining disbursements. This will help in the regular disbursement of grants, reduce administrative burdens, and give greater operational autonomy in procurement for researchers. 

Second, the ANRF needs to operationalise its PAIR hub-and-spoke model to democratise research grants beyond tier-1 IITs and build capacity across state universities. This may bring out innovation from regions of India that have hitherto remained underfunded. 

Third, there is a need to restructure the IP policies of higher education institutions by establishing professional Technology Transfer Offices (TTOs) and enabling clear university patenting frameworks. 

Fourth, the government may explore deploying grants and tax incentives to bring in private capital in deep-tech startups, particularly through the high-cost TRL 4–7. Such support can help  reduce the ‘valley of death’ between laboratory validation and commercial deployment.

While administrative measures can resolve domestic bottlenecks, scaling deep-tech also requires pairing scientific research with more capital, particularly from the private sector. The effectiveness of mature innovation systems, including the US’s Triple-Helix model of university-industry-government collaboration, and the ANRF’s attempts to develop long-term, risk-tolerant funding mechanisms, will shape India’s capacity to narrow industry-academia gap.

Post read questions

1. India’s R&D ecosystem remains heavily dependent on public funding. What are the implications of limited private-sector participation for technological innovation?

2. India’s transition from a service-led economy to a technology-intensive manufacturing economy requires a fundamental restructuring of its R&D ecosystem. Discuss the institutional, financial and industry–academia reforms required.

3. How can the Anusandhan National Research Foundation (ANRF) transform India’s R&D ecosystem? Discuss the opportunities and challenges associated with its mandate.

4. What is the ‘valley of death’ in deep-tech innovation? Why does it pose a particular challenge to India’s efforts to commercialise indigenous technologies?

5. Technology Readiness Levels (TRLs) provide a useful framework for understanding the transition from scientific research to commercial deployment. Explain their significance in deep-tech innovation.

(Kannan K is a Doctoral candidate at the Centre for Economic and Social Studies, Hyderabad.)  

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