India lags in R&D, needs private sector contribution: Economic Survey

Developed and emerging economies like China, Japan, South Korea, and the USA see private enterprises contributing over 50% of their total R&D expenditure.
Indian pharma firms trail global peers in R&D, innovation, and talent metrics: FAST India-IIFL Securities
Indian pharma firms trail global peers in R&D, innovation, and talent metrics: FAST India-IIFL Securities
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NEW DELHI: India is facing a significant gap in research and development (R&D) across key sectors, with a strong need for greater private sector involvement, according to the Economic Survey 2025, released on Friday. The survey highlights that while R&D spending in India has shown growth, it still lags behind global standards.

The gross expenditure on R&D (GERD) in India has risen from approximately ₹60,196 crore in FY11 to ₹127,381 crore in FY21-22. However, this still represents only 0.64% of the country's GDP—significantly lower than in many other nations that have made substantial advancements in R&D.

In contrast, developed and emerging economies like China, Japan, South Korea, and the US see private enterprises contributing over 50% of their total R&D expenditure. In the US, tech giants such as Google and Amazon alone account for around 70% of the nation’s R&D spending. Meanwhile, China’s R&D investment, which stands at 2.1% of its GDP, is driven by a combination of substantial government funding and increasing private sector participation.

In India, however, industrial R&D remains underdeveloped and is heavily concentrated in a few sectors—primarily pharmaceuticals, information technology, transportation, defense, and biotechnology. Public sector R&D is largely dominated by the defense sector, followed by fuels and metallurgy. The survey also points out that India’s historical emphasis has been on basic research, rather than applied research, which often lacks practical applications necessary to attract significant private investment.

To address this shortcoming, the survey calls for a stronger collaboration between industry and academia, a boost in private sector involvement, and a shift towards prioritising applied research. It urges the private sector to take on a more active role in addressing the nation’s R&D challenges, emphasizing that investments in applied R&D are critical to fostering innovation and driving growth across various sectors.

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