Transforming India's Innovation Ecosystem

The building blocks are clear—world-class talent, robust infrastructure, strong industry-academia linkages, and catalytic public procurement

- Amitabh Kant

Classical growth models treated technology as an exogenous factor that drives development. However, modern growth theory suggests technology is an endogenous factor, a product of investments in education, innovation, and ideas. This has important implications for India's growth story. However, we have not yet fully leveraged our innovation potential.

India's research and development (R&D) expenditure, as a percentage of gross domestic product (GDP), remains around 0.7%—in comparison, it is 5.2% for South Korea, 2.6% for China, and 3.6% for the US. To bridge this gap, the ₹1 lakh crore R&D fund announced in July 2024 and the fund of funds for deep tech announced in February 2025 must be operationalized at the earliest.

While we are granting more patents than ever—over 100,000 granted in 2023-24—most of them remain uncommercialized. A study by the Fraunhofer Institute reveals that, over the last decade, payments for intellectual property rights (IPR) have increased from $4.8 billion to $14 billion. The number of IPR receipts have doubled from 0.7 to 1.5 billion. Thus, there is a wide gap between payments and receipts.

At the same time, global dynamics are shifting. Advanced economies are cutting funding for research departments and universities. In the US, tensions are escalating between Harvard University and the Trump administration. Norms on student visas are also becoming stricter in developed countries. This is an opportune time for India to make a strategic leap forward in building our innovation ecosystem. We need to attract and retain talent, and we need the infrastructure.