Budget 2026 must boost R&D activity

Innovative activity is widely recognised as a key driver of competitiveness and economic growth.

- NAGESH KUMAR

Its importance has only increased in the context of the artificial intelligence (Al) revolution and the compulsions of net-zero. Hence, India’s underperformance in gross research & development (R&D) expenditure (GERD) as aproportion of gross domestic product — stagnating at around 0.7 per cent, much lower than the global average of 1.93 per cent — has attracted much debate. Other countries like China spend a far higher proportion on R&D, at about 2.6 per cent.

The output indicators of innovative activity — for example, India’s rank improving from 81st to 38th between 2015 and 2025 in the World Intellectual Property Organization’s Global Innovation Index—present a more encouraging picture. Patents filed in India have also surged, from 24,326 in 2020-21 to 68,176 in 2024-2S. ISID’s India Industrial Development Report 2024-25 finds India’s GERD to be underestimated and projects it at around 1.25 per cent — more respectable than 0.7 per cent, but still low.

Another concern about GERD is that over 60 per cent of it is spent not by business enterprises, where it could help sharpen their competitive edge, but in government laboratories, including those run by the Council ofScientific & Industrial Research, the Defence Research and Development Organisation, and the Indian Council of Medical Research, among others. While mission-oriented R&D organisations such asthe Indian Space Research Organisation have achieved considerable success, government laboratories often face challenges in commercialising their innovations.