We can't count on loans to set off an R&D boom

India's new credit scheme for research, development and innovation is unlikely to suffice in the face of a national urgency. We need R&D infrastructure and better-suited risk capital

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In the final budget for 2024-25, the government had announced a scheme with a corpus of ₹1 trillion to promote research, development and innovation (RDI) in India's private sector. Almost a year later, the Centre has unveiled a broad outline for this programme. Sure, it is better than nothing, but, as it stands, it seems unlikely to ignite much innovative passion. Given the dismal track record of our private companies on R&D—as a nation we spend less on it than what Amazon does in a year and only 37% of that sum is by private entities—we need a whole lot more than the offers of cheap finance that this RDI scheme proposes to make. Large established businesses are turning their attention to such exciting sectors as paint, jewellery retail and ethnic-wear.

For innovative work in deep tech and other frontier fields, we need smaller R&D-focused firms and ambitious startups to make headway. These businesses need far more than mere access to funds, even if this is a prerequisite.