Indian Economy

Project Report
R&D and Innovation in India Status, Emerging Trends
and Challenges

Section C
GROUP 3
PGP/18/131
PGP/18/149
PGP/18/151
PGP/18/153
PGP/18/144
PGP/18/170

ATIBHI LEHAKRA
NEHA PANDE
NIKKI KUSHWAHA
NISHANT DEY PURKAYASTHA
MAHINDER PRATAP SINGH GANGAWAT
SUJIT KUMAR

Table of Contents
1. Introduction.........................................................................................................1
2. Current Status of R&D in India..........................................................................1
3. Key Challenges facing India on R&D/Innovation..............................................2
4. Key Initiatives Undertaken to Improve R&D.....................................................3
4.1

National Innovation Council.........................................................................3

4.2

Department of Science and Technology (DST)............................................4

4.3

Department of Scientific and Industrial Research (DSIR)...........................4

5. Policy Measures Needed.....................................................................................5

5.1

Existing Supply-Demand Situation...............................................................5

5.2

Attract and Retain the Best Talent for R&D.................................................5

5.3

Funding Innovation and R&D......................................................................6

5.4

Reforms Needed to Improve R&D...............................................................7

5.5

Improving R&D and Innovation Capabilities...............................................7

6. Innovation in India A Practical Look...............................................................8

6.1

Breakthrough Innovations in India...............................................................8

6.2

A Visit to NIT Calicut, a premier institute....................................................9

7. Summary...........................................................................................................10
8. References.........................................................................................................11
9. Appendix...........................................................................................................12

1. Introduction
Research and development (R&D) forms the basis of future competitiveness of any country, as it
is critical for innovation. The research ecosystem in India presents a significant opportunity for
multinational corporations across the globe on the back of its highly talented engineers at
competitive costs. Though India accounts for about 10% of all expenditure on research and
development in Asia, there are only 140 researchers per 1,000,000 as compared to 4,651 in the
United States. Also, Indias investment in science and technology is about one-fourth that of
China, while the United States invests approximately 75 times more than India on science and
technology. India aspires to emerge as one of the top five knowledge powers in the world in the
area of Science, Technology and Innovation and this calls for a need of benchmarking against
global best practices in shaping the R&D sector. As India aspires for faster, sustainable and
inclusive growth, the Science, Technology and Innovation system, with the advantages of a large
demographic dividend and the huge talent pool can play a defining role in enabling India to
achieve the set goals.

2. Current Status of R&D in India

In the contemporary times, when we see myriad innovations and technological advancements
happening around the world, we hardly find name of India in the list of major contributors.
One of the primary reasons that can be cited for this is the relatively low budget
allocation and expenditure on R&D. Indias R&D expenditure has been declining over
the last couple of years and is at 0.9% of the budget. This is lowest among BRIC nations
and much lower than the US and South Korea which are close to 3-4%. In 2011, Indias
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R&D expenditure was $36 billion as compared to $405bn by US and $300bn by China.
Even private firms expenditure on R&D has been declining
The number of patents being published has been constantly declining. When we see
countries like the US and china, India fares poorly in terms of number of patents being
filed and granted
Innovations are also not promoted within the country. The Global Innovation Index
developed by INSEAD measures inputs like institutions, human capital and research,
infrastructure, market and business sophistication and outputs like science and
technology. According to the Global Innovation Index rankings, India has seen a steep
decline in its position of 23 in 2007 to 66 in 2013

3. Key Challenges facing India on R&D/Innovation

The primary barriers to innovation in India are listed below:
Indian Science & Technology budget has stagnated at about .9% of the GDP. The promise
to raise it to 2% has passed on from the 9th five-year plan to the 12th plan with no avail.
The private sector expenses in R&D is increasing but the Indian Government is not
keeping pace with global R&D spends.
The educational environment in India, unlike that in most developed countries, is one that
is driven by an instruction system and formulas, as opposed to one driven by curiosity,
exploration and understanding. The spirit of curiosity isnt sparked and creativity in
thinking is not encouraged.

 Brain drain i.e., migration of highly skilled and educated youth from the country abroad
in search of better pastures, is a result of the fact that there is no incentive provided by the
system to ensure that the top talent stays within the country.
The nation has very few institutes and organizations that can provide a healthy and
internationally comparable environment for research. There is very little support from the
Government too in terms of policies to promote R&D.
The drive to build indigenous IPRs and patents across sectors is often neglected.
However, most international MNCs make use of the Indian eco-systems and resources to
build their patent portfolios.
Unlike most great universities and institutions abroad, in India there is a lack of
collaboration between the industry and academia.
The Science & Technology Portfolio in the government is usually not given due
importance. Often, the portfolio lacks good ministers and is neglected within the
Government.

4. Key Initiatives Undertaken to Improve R&D

4.1 National Innovation Council
The National Innovation Council was formed under the chairmanship of Sam Pitroda to create a
road map for sustainable innovation from 20102020. The key focus areas of this council are:
Federal Policy and Incentive Schemes that will promote R&D activities

 Initiatives to create local innovation ecosystem models for State & Sector Level
Innovation Clusters
Industry & Cluster Innovation Center (CIC) provides a platform to forge linkages
between various stakeholders from the industry and academia, to initiate and assist
innovation activities and to act as a catalyst and facilitator
Provide research institutes access to capital, skilled manpower and a market for their
innovations
Build Public Private Partnerships (PPP) to give a thrust to R&D

4.2 Department of Science and Technology (DST)

National Science and Technology Entrepreneurship Development Board (NSTEDB) was
setup in 1992 to promote and develop high-end entrepreneurship for S&T
Technology Development Board was established to provide financial assistance to R&D
practitioners and institutions in the form of equity soft loans or grants
The Technology Commercialization Facilitation Agency setup by TIFAC facilitates early
assessment of innovative technologies by identifying their commercial potential and
provides the innovators the required financial, marketing and operational advice for
commercialization

4.3 Department of Scientific and Industrial Research (DSIR)

PRISM (Promoting Innovations in Individuals, Start-ups and MSMEs) provides grant for
Innovation, prototype to final product (Rs. 2L - 50L)
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 An Industrial R&D Promotion Program has been developed to promote R&D activity by
the industry
A significant R&D tax incentive provided in India is a 200% accelerated deduction on
scientific research expenditure incurred by an in-house R&D facility (Biotechnology,
Manufacturing Etc.).
Tax exemptions are provided for equipment imported for R&D activities.

5. Policy Measures Needed

5.1 Existing Supply-Demand Situation
A survey of 47 universities conducted by the University Grants Commission in 2007-08 revealed
vacancy levels as high as 51 per cent in R&D. The situation has hardly changed since then.
About 40% of the faculty positions are vacant in the top 7 IITs. The situation is even worse in the
newer ones. Within a few years, one in four graduates in the world might come out of Indian
colleges. Theres a huge potential of Indias higher education system and the need of the hour is
to develop policies to tap this potential.

5.2 Attract and Retain the Best Talent for R&D

The need of the hour is to expressly adopt policies to attract the cream of the country towards
R&D. Some of the measures than can be undertaken to achieve this are:

Increase government allocation towards R&D from 0.9%

autonomy to institutions to utilize the funds

to 2.5% and give full

Reform the science curriculum in line with the changing world and increase research
component at all levels. The education system needs to be revamped to facilitate curiosity
building right from the childhood.

Radical changes are required in the evaluation system to encourage scientific thinking
and promote better understanding of basic science concepts

Revitalize the teaching profession to attract and retain quality teachers

Formation of a national institute similar to the National Science Foundation in USA

whose primary function is to promote science and engineering through research programs
and education projects

Link IPRs with national initiatives Make in India, Digital India, Skill India and
Smart Cities

IPR must be a subject in law colleges, IITs and IIMs to increase awareness

Promote alumni involvement and collaboration with foreign universities

5.3 Funding Innovation and R&D

Diversion of investment for research centers should be made part of the Planning
Commissions proposal

Bilateral cooperation agreements can be signed with nations who are ahead of India in
terms of R&D to facilitate mutual investment in research

Platforms need to be provided to promote interaction between VCs, entrepreneurs &

scientists

Focus should be on establishing a fiscal and regulatory framework that encourages risk
taking by financiers

Credit sources in smaller areas (MFIs, etc.) should be encouraged to invest in skill
development of the MSMEs

Implementation of a proposal for PPP through the National Innovation Foundation

Initiatives like Small idea Small money, Risky idea funds, Technology business
incubators (TBIs) have turned out to be beneficial

5.4 Reforms Needed to Improve R&D

An ecology needs to be created the government, universities, corporate houses, venture
capitalists, and all other stakeholders will come together for the enablement of the entire
science eco-system with an eye on future sustainability
Give autonomy to the professors, scientists, and institution heads to bring about the
necessary conditions required for the advancement of research goals
Sound incentive system should be given to the corporate sector involved in scientific
R&D with infrastructure and financial benefits
Develop partnerships with relevant peer institutions in India and abroad

 Measures such as financial support and other suitable incentives to encourage students to
adopt research careers and awards to recognize scientific achievement
End the colonial legacy of separation of research from teaching and include some
research component as part of the science curriculum at all levels
Restructure the curriculum to make it more practically oriented

5.5 Improving R&D and Innovation Capabilities

The government should raise the R&D budget from .9% of GDP to the previously
promised 2% or higher at the earliest without further delay
There is a need to encourage active interaction and exchange with international research
institutions. Cross-country research cooperation and knowledge sharing is extremely
important. In this regard, Indian origin scientists based in foreign countries can play a
huge role.
A sound incentive system should be provided to the corporate sector involved in
scientific R&D with incentives such as special economic zones, technology parks for
R&D establishments, etc.
Rewards and recognition for scientific research can be used as a way to encourage
youngsters to consider careers in research. The private Sector can act as patron here.
India needs to learn and adopt global best methods and practices for project and R&D
management. This is necessary to make Indias R&D landscape as attractive as that of
foreign countries.
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 Grass roots innovation needs encouragement and availability of funds is crucial to make
the rural innovations scalable and reproducible.
National science, Technology and innovation foundation is being setup by the
government to facilitate investments in Science & Technology projects under PPP mode
and large scale R&D facilities under PPP mode

6. Innovation in India A Practical Look

6.1 Breakthrough Innovations in India
TITAN EDGE
Titans director Xerxes Desai set his team a challenge: Create the slimmest water resistant watch
in the world (maximum 3.5mm thick). When Titans designers went to the Swiss, the masters of
watch making, with this idea, they said that it was impossible to achieve. However, Titans team
took up the challenge and after months of perseverance, created engineering miracle to come up
with Titan Edge. As per B.V.Nagaraj, the then head of product engineering, the top challenge was
to instill in people the self belief that they could do it.
BOSCH INDIA
Stringent emission norms for diesel engines required expensive engine modifications to enable
interaction with complex high pressure pumps. While the rest of the world was focusing on
developing cost effective ways to modify the engine, Bosch India reframed the challenge and
looked at modifying the pump instead so as to make it fit for interaction with the existing engine.
Boschs engineers made changes in traditionally used PF45 pump and the impact was
tremendous. This innovation broke worldwide industry norms. Existing diesel engines could now
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move to the stringent emission norms of EURO IV< V and VI without expensive engine
modifications.

6.2 A Visit to NIT Calicut, a premier institute

A visit to NIT Calicut which included interactions with a research scholar and a couple of senior
faculty members primarily revealed the following insights:
As opposed to conventional belief government funds allocated to the countrys premier
institutes is enough to procure the required research equipment. However, procurement of
equipment can be a long process due to the stringent regulations and bureaucratic hassles
involved.
Professors/research scholars desire more autonomy with regards to means to spend the
allocated funds
The stipend paid to research scholars is not enough to attract the best talent, due to which
candidates interested in research prefer to go abroad. If brain drain is to be stemmed,
financial incentives need to be made more attractive.
There is no proper mechanism inbuilt in the academic structure to generate interest
towards R&D among graduate students. The prevailing perception is that R&D is not a
rewarding field.
Industry-academia collaboration is missing due to which research conducted usually does
not lead to practical applications. The research is limited to the publishing of a journal
paper.

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 There is no mechanism put in place by the government to monitor the usage of the
allocated funds. In other words, there is no system of accountability.

7. Summary
Indias presence in global research and innovation is very poor and it needs heavy investment in
R&D expenditure with public private partnership. The government needs to recognize the role of
innovation in fostering indigenous capabilities. Since India has a young population, it has a
demographic advantage for coming 30 years and holds the potential to be a power in next
generation. It needs to utilize its people in R & D with lucrative environment and should ensure
that funds do not take too long to arrive for a project due to bureaucracy. It is a rapidly changing
world and the timeliness of financial assistance will make a huge impact. An inclination towards
educating the masses in Intellectual Property Rights will help in boosting R&D and innovation in
India. Mechanisms need to be developed to engage all stakeholders including government,
industry, universities, etc. Also, there is obsession with engineering fields and interdisciplinary
courses arent encouraged. Customizing a diversified education should be an option so one
doesnt have to choose between subjects. Innovation is increasingly being seen as the currency of
the 21st century and India should strive to build strong R&D and innovation to establish its
supremacy and strengthen the development pace.

8. References
Mathematicians treat the discipline more as an art than as a science by Shubashree
Desikan

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 IPR must be a subject in law colleges, IITs and IIMs: Draft national policy by Dhanajay
Mahapatra
Learning from one another by Amartya Sen
India must tackle four challenges to get ahead in science, The Economic Times
Only 20% of patents filed in India yearly are local, Times of India
Towards a More Inclusive and Innovative India, Office of Adviser to the Prime Minister
Public Information Infrastructure & Innovations
Are we really teaching science in our schools?, Jyotsna Vijapurkar
Making Breakthrough Innovation Happen, by Porus Munshi
US patents from MNCs have shot up while those filed by India Inc and institutions are
declining, The Economic Times

9. Appendix

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Public vs Private expenditure on R&D

Expenditure on R&D as a percentage of budgets

Number of patent applications filed and granted

13

Indias ranking in Global Innovation Index over the years

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