R&D as a Driver of Economic Resilience

The total investment in R&D in India is estimated at about Rs 1.3 trillion in 2023-24 with about 57.0 per cent of funding from public sources. Close to 60.0 per cent of this Government funding is by strategic departments of the Government which include the Defence Research and Development Organization (DRDO), Department of Space (DoS) and Department of Atomic Energy (DAE). Some of the successful technologies and products that have sprung out of this funding include indigenous missile systems, remote sensing and communications satellites, and nuclear power plants.

While these technologies are strategically important, other technologies like semiconductors and integrated circuits, nanotechnology, artificial intelligence (AI), and genetic engineering are also important for a country like India, with a sizeable population of 1.4 billion. Compared to our success in some strategic domains, India still needs to catch up in other important technologies impacting the lives of its citizens. Not catching up has significant cost implications. India imported about US$90 billion worth of electronics goods in 2023-24, even as we are ramping up our electronics manufacturing capability.

A useful way to see what focused, long-horizon R&D can unlock is to study economies that turned research depth into industrial leadership. Taiwan’s prowess in semiconductor manufacturing can be traced to its R&D institutions that nurtured both research and talent development in electronics without depending on excessive foreign aid, public or private. The Industrial Technology Research Institute (ITRI) was their flagship R&D organization. ITRI has nurtured both Taiwan Semiconductor Manufacturing Company (TSMC)- the world’s largest fab and United Microelectronics Corporation (UMC)- the world’s fourth largest fab.

This was the foundation for their world-leading semiconductor industry today. Taiwan exported about US$165 billion worth of semiconductors in 2024. Taiwan spends 3.0 per cent of its GDP on R&D compared to India’s 0.6 per cent.

Nor is this transformation unique to one geography; mission-driven programs have repeatedly created spillovers that redefine entire industries. Perhaps the most exemplary R&D project is the ARPANET project of ARPA (Advanced Research Projects Agency), which was an organization in the US’s Defense Department. ARPANET exists today as the Internet, the technology that has impacted the world like no other in the 20th century. The various spin-offs over the decades from this R&D project are practically all the information and communications technologies we use today, and the USA still has the pole position in this domain.

The lessons from these examples are clear. India must use the power of a virtuous cycle – of R&D, spin-offs, and wealth creation – to develop new domains and technologies that can significantly contribute to our national economy by making us more self-sufficient in core technologies, creating jobs, and creating wealth.

We have done this in the past. India used to have a significant mortality rate of children under five dying due to rotavirus infection. India’s first indigenous vaccine is Rotavac, a rotavirus vaccine that was developed using a live rotavirus strain isolated from AIIMS (All India Institute of Medical Sciences) and productized by Bharat Biotech. It costs US$1 per dose in India compared to about US$15 for imported vaccines. Rotavac is now part of India’s Universal Immunization Programme and has reduced rotavirus deaths significantly since its inclusion.

Rotavac proves India can convert deep science into affordable impact; the imperative now is to make such outcomes systematic rather than exceptional. Important aspects that require our immediate attention are to strengthen the governance and funding for Indian R&D, to enhance our capability for translational R&D, support MSMEs to absorb latest technologies, and government becoming an anchor customer for translational R&D.

Strengthening the Governance and Financial Outlay of the R&D and Innovation System

India is aware of its underinvestment in R&D. The immediate focus should be to push gross domestic expenditure on research and development (GERD) as a percentage of GDP from 0.6 per cent to at least 3.0 per cent. The industry should take the lead in doing so. The Government of India has introduced the Research, Development, and Innovation (RDI) Scheme, a significant initiative with a corpus of Rs 1 trillion aimed at catalysing private sector investment in research and development. The scheme is designed to position India as a global leader in innovation by fostering a robust ecosystem for cutting-edge research in strategic and sunrise sectors. Our recent mission-mode programs, like the National Mission on Interdisciplinary Cyber-Physical Systems (NM-ICPS) with funding of Rs 37 billion, the National Quantum Mission (NQM) with funding of Rs 60 billion, and IndiaAI with funding of Rs 103 billion, are examples of well-funded national programmes focused on translational research.

Funding and missions set the stage, but outcomes depend on what happens next – how quickly ideas traverse the last mile from lab to market.

Nurturing the Capability for Translational R&D

To turn ambition into adoption, India must strengthen the translational machinery that connects researchers (from higher education institutions and labs), startups, MSMEs, and industry around real-world problems. And create innovative products and solutions, especially in emerging technology and other deep-tech domains. The ecosystem should encourage work on innovations through inter-organizational collaborations in multidisciplinary technologies to solve challenging real-life problems. Equally crucial is improving the ease of doing research so scientists spend more time on science than on paperwork.

Organizations like the Biotechnology Industry Research Assistance Council (BIRAC), Innovations for Defence Excellence (iDEX), etc. are at the forefront of leading our efforts in translational R&D.

There are also sustained development programmes for building foundational capability, offered by organizations like the Gopalakrishnan Deshpande Foundation (GDC) funded by science philanthropists. GDC has partnered with over 100 universities, research labs, and incubators across India to develop the entrepreneurial quotient by training over 1,700 researchers and entrepreneurs and nurturing over 450 deep-tech startups. Anusandhan National Research Foundation’s (ANRF) AI-for-Science initiative focuses on using AI to model scientific equations in physics, chemistry, and biology. This is expected to drastically shorten the time it takes to translate theory into practice in scientific domains.

Supporting MSMEs to Absorb New Technologies

Micro, Small and Medium Enterprises (MSMEs) contribute to about 30.0 per cent of India’s GDP. They are also a large employer. MSMEs must be brought into the ambit of the innovation ecosystem. Special focus should be on how MSMEs can familiarize themselves with and access the latest emerging technologies and translational R&D. MSMEs may require mentoring to absorb new technologies. Industry organizations like CII have played a foundational role in enhancing the competitiveness of Indian MSMEs by offering interventions to enhance the productivity levels of MSMEs in different industry sectors through adoption of latest technologies and transfer of best practices.

Government Becoming an Anchor Customer for Translational R&D

The Indian government can significantly catalyse research and development by strategically acting as an anchor customer for products from translational R&D driven deep-tech startups and MSMEs, and R&D driven products from Indian companies. By committing to procure innovative, locally developed R&D driven technologies the government provides industry, startups and MSMEs with a crucial first revenue stream and invaluable market validation. This initial purchase de-risks the venture for private investors, making it easier for the startups to secure further funding. The revenue generated from government contracts can be reinvested into further R&D, creating a virtuous cycle of improvement and innovation. This policy sends a powerful signal to the entire ecosystem that there is a viable domestic market for deep-tech R&D driven products, thereby encouraging more scientists and entrepreneurs to translate cutting-edge research into tangible solutions for India’s challenges.

A concerted effort, championed in collaboration by government, industry including startups, and science philanthropy is the critical next step. By strategically investing in its intellectual capital, India can unlock the virtuous cycle of innovation and build a prosperous, self-reliant nation. This is integral to our Viksit Bharat goal.

Note: This article has been contributed by  Mr Kris Gopalakrishnan, Past President, CII Chairman, CII National Task Force on Genomics & Co founder, Infosys and was published in CII ARTHA