INDIA’S R & D ESTIMATES ARE AN INCOMPLETE PICTURE:
Context:
∙When compared to other major countries, India’s research and development (R&D) expenditure-to–
GDP ratio of 0.7% is extraordinarily low and significantly lower than the global average of 1.8%.
Issues with the present framework:
∙The corporate sector’s underinvestment in R&D is the key contributing cause. Around two-thirds of
gross domestic expenditures (GERD) are made up by the business sector in wealthy countries,
compared to only 37% in India. Nonetheless, there is proof that India’s GERD statistics are
exaggerated.
∙American multinational corporations (MNCs) invested $9.5 billion in R&D in India in 2018 and $9.8
billion the next year, according to a 2022 infobrief published by the National Science Foundation
(NSF) of the United States.
∙MNCs from other developed nations make investments in R&D in India. An estimate of foreign MNC
R&D investment in 2017–18 has been supplied by the Department of Science and Technology (DST),
and it is less than 10% of what American corporations have acknowledged spending in India.
∙India’s GERD statistics are compiled by the National Science and Technology Management
Information System (NSTMIS) of the DST. For the public sector, academic institutions, and
government organisations, information about R&D is easy to access. Getting statistics from the private
sector is challenging. There are two key reasons why the reported R&D projections are sorely
insufficient.
∙All of the R&D performing companies are not included in the approach used to identify them. The
NSTIMS does this by using both the Prowess database of the Centre For Monitoring Indian Economy
(CMIE) Pvt. Ltd. and the Department of Scientific and Industrial Research (DSIR) list of recognised
R&D entities.
There may not be many true R&D performers on the DSIR list for two reasons:
∙Businesses may not feel pressured to join the DSIR if they don’t think the government’s incentives to
be strong enough or if they are reluctant to provide the DSIR access to private information.
∙It may be challenging for R&D companies that provide software and other services to have separate
R&D infrastructure from their main business. Several businesses engaged in cutting-edge technical
R&D might be categorised as services.
Going forward
∙Both immediate and long-term actions are required for India’s R&D statistics to accurately reflect the
R&D ecosystem.
∙The NSTMIS will soon include data on patents granted to the R&D performing firms identified by its
existing methodology in both India and the United States.
∙Although while surveys can gather a lot more data regarding innovative activities, R&D statistics
shouldn’t solely rely on survey replies. Annual R&D estimates can be created instead utilising the
mandatory disclosures that the firms must submit to the MCA.
∙Technology can be used to ensure compliance and appropriate reporting, as in the case of newly
developed income-tax return forms where several components are interconnected.
∙The inclusion of information on R&D expenditures that must be properly disclosed to regulatory
bodies in the environmental, social, and governance (ESG) rating of corporations should also be made
mandatory.
Conclusion:
∙Maximizing India’s R&D potential is one of the crucial elements of our mission to build a $5 trillion
economy by 2025.
