India’s spending on research and development (R&D) is among the lowest in the world, per a study conducted by government think-tank NITI Aayog and Institute for Competitiveness.
R&D investment in India, in fact, has declined from 0.8% of the GDP in 2008–09 to 0.7% in 2017-18.
Data shows that India’s GERD is lower than the other BRICS nations. Brazil, Russia, China and South Africa spend around 1.2%, 1.1%, above 2% and 0.8% respectively. The world average is around 1.8%.
The India Innovation Index 2021 has found that the overall spending on R&D by India has been relatively low across the country. This was reflected in the overall share of gross expenditure on R&D (GERD) as a percentage of GDP, at about 0.7%.
Developed countries the United States, Sweden, and Switzerland spend about 2.9%, 3.2% and 3.4%, respectively. Israel spends 4.5% of its GDP on R&D, the highest in the world.
Among the reasons cited for the low spending on R&D in developing countries like India is that investments in R&D take time to produce results. Countries like India tend to have bigger issues like hunger, disease control, and raising the quality of life and authorities divert resources towards tackling them.
“However, it can be argued that these pressing concerns shouldn’t be viewed as a hindrance, but rather an opportunity to widen the ambit of R&D,” the study says.
Data shows that countries that spend less on GERD fail to retain their human capital in the long run. “Lower spending on R&D, and less innovative opportunities may lead people to move from one region to another region – state/ country for better opportunity. This phenomenon is known as brain drain and reduces the competitive edge of a state, further impacting the country’s overall economy,” the study says.
For India to achieve its goal of a $5 trillion economy, India’s GERD needs considerable improvement and needs to touch at least 2%
India & stagnant research performance
India’s GERD at $43 per capita is one of the lowest in the world. India’s BRICS and ASEAN counterparts like Russia (285), Brazil (173), and Malaysia (293) fare much better.
Data shows only Mexico, $0.31had a lower share of GERD as a percentage of GDP.
“With such low contribution, R&D performance remains stagnant,” the report said.
Many companies, experts and even the RBI, over the years, have flagged the poor performance when it comes to R&D. It has also been observed that there is a mismatch between what is taught at the university level and what is required at the industrial level, the study says.
Most recently, Infosys co-founder Kris Gopalakrishnan had asserted the need for higher spending on R&D, with more contribution from private companies and institutions.
“We need to invest more money in research. Research spending should hit 3% of (India’s) GDP from 0.7% currently. Of this private contribution should jump at least 1.5% from 0.1% at present,” said Gopalakrishnan.
However, things may be looking up. India attracted $343.64 million in foreign direct investment (FDI) equity inflow in the R&D in 2021, a jump of 516% YoY. FDI Equity inflow from several countries like Germany, Mauritius, France, Singapore, Oman and USA showed an increase of more than 200 per cent as compared to 2020.