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The private sector can transform India’s science, innovation and R&D landscape

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India’s growth story is guided by the central and state governments, and the private sector powers it. However, for the country to grow further over the next few decades, it needs to transform its science, innovation, and research & development (SIRD) landscape.

The Indian SIRD space is dependent on government investment, infrastructure, institutions, and bodies. The government-backed IITs, IISc, TIFR, IISERs, national labs, and central universities form the backbone of R&D in the country. India’s R&D investment for 2017-18 was over 1,13,000 crore, which rose to 1,23,000.71 crore in 2018-19. The gross expenditure on R&D (GERD) has increased three times by volume in the last decade.

However, GERD as a percentage of GDP shows a declining trend in the same period.

India’s GERD was only 0.65% of GDP in 2018-19, which is among the lowest in the world. Both upper and middle-income countries have a GERD-GDP ratio of over 1.46. It does not imply that India is performing poorly in the SIRD segment. The R&D expenditure per capita rose by $16 from 2007-08 to 2017-18. Furthermore, from the academic perspective, India outperformed most countries in publishing scientific research in peer-reviewed publications and indexed databases. The NSF, SCOPUS, and SCI databases ranked India in third, fifth, and ninth position with regard to scientific publication output in 2018.

India jumped from 81 in 2015-16 to 46 in 2021 in the Global Innovation Index (GII) when it comes to innovation. While India was granted a record 58,502 patents in 2021, it is way behind other competitive economies such as China (5.30 lakh) and the United States (3.52 lakh patents).

Despite the pandemic’s impact and the global economic downturn, the government has been pushing SIRD. In 2021, it rolled out the fifth draft of Science, Technology Innovation Policy, 2020, for multi-stakeholder consultation. Furthermore, it has recently established the National Research Foundation (NRF) “to catalyse, facilitate, coordinate, seed, grow, and mentor research in institutions around the country”.

To become atma nirbhar (self-reliant), it has allocated 76,000 crore for the Design-Linked Incentive (DLI) scheme to start greenfield semiconductor and display fabs. The growth of domestic semiconductor R&D and manufacturing will be a catalyst for growth across sectors, leveraging new-age technologies.

Despite these efforts, SIRD is far from becoming India’s strong point. While the government has been instrumental in guiding India’s growth trajectory, the private sector has been the primary driver of national growth and development. As per an Asian Development Bank report, the private sector’s contribution to GDP increased from 66% in 1980s to over 80% in 2000s. It also shares over 75% of domestic capital formation, attracting massive investments over the years.

Although the private sector is doing a lot, the Indian SIRD landscape still needs concerted support from corporates and other stakeholders. The private sector contributes less than 40% to GERD, whereas its contribution goes beyond 70% in other advanced countries. India needs its public and private sectors to collaborate on a war footing on the following fronts.

The private sector in India has to lead SIRD with massive investment and shoulder the onus of funding and driving the segment, either through corporate investments or philanthropic grants. In addition, it needs to engage with the government agencies to work in PPP models and boost R&D in the top 100 nationalised institutions, laboratories, and research spaces.

Furthermore, it must develop its R&D infrastructure and skilling capabilities to drive independent research in various fields. The Indian government has already allowed corporate social responsibility investment in R&D space. The private sector should channelise its funds effectively to achieve measurable outcomes. The Indian private sector, primarily through various industry bodies, has the potential to bring all key stakeholders on the same page and strengthen sector-wise R&D and innovation. Another important aspect is that it can support scientists and academia and their ongoing research while encouraging the creation of a more robust talent pool.

India needs to develop PPP models to boost science and innovation, especially from grant-facilitating organisations like NRF. These PPP models should look at collectively sharing the risk of promoting open-ended research on various sectoral or technology verticals. The PPP model may work because in the initial phases, independently, neither the government nor the private sector might be willing to support open-ended research, which would limit innovation and creative problem solving.

It is well understood that the government(s) may have limitations in providing extensive public investments for R&D. The government, in consultation with the private sector, should have a relook at the policies and regulations around the private sector’s role in research and innovation. There’s a need to adopt a light-touch policy, incentivise the private sector to boost R&D, create differentiated zones under PPP model to design more labs and research institutions, and allow the private sector to run operations at the R&D centres.

The government and the private sector should rethink India’s strategy of increasing foreign direct investment into R&D India. Currently, the accounts for R&D show a decline in foreign investments, which is 0.13% of total FDI (2019-2020). This shows there’s a tremendous opportunity for international partners to invest in FDI.

My experience across sectors, collaborations between multiple stakeholders can accelerate the impact of breakthrough innovations. The rapid development of Covid-19 vaccines is an outstanding example. Similarly, we are witnessing collaboration between electric vehicles manufacturers and IT universities in the auto sector.

To be successful, such collaborations require resource support from private and public sectors, validation for start-ups and new-age enterprises, and the support to undertake rapid commercialisation by either established companies or start-ups.

In driving India’s growth story over the next few decades, the private sector can once again play an instrumental role. It needs to shed the hesitation of investing in science and innovation and actively pursue collaborating with the government, academia, and other stakeholders. In the age of rapidly evolving technologies, the transformation of the Indian SIRD landscape is not a choice but a necessity.

Raj L Gupta is co-chair, Board of Advisors, Johns Hopkins Gupta-Klinsky India Institute

The views expressed are personal

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