CEA warned that such underinvestment could lead to
- Existential threat to India’s future corporate profits (due to technology dependence).
- Loss of geopolitical leverage (due to poor global value chains integration).
Current Status of R&D Expenditure in India
- Gross Expenditure on Research and Development (GERD): India’s GERD is 0.6-0.7 % of GDP.
- It is significantly lower than South Korea (4.9%) and Israel (6.3%).
- Funding Share: Government (~64%)&private sector (~36%) of total R&D spending,
Why India’s R&D expenditure remains low?
- Captive Domestic Market: Large domestic demand reduces pressure for export competitiveness and innovation.
- Colonial De-industrialisation: Colonial rule shifted focus from manufacturing (such as textiles) and innovation to commerce, trading, and arbitrage.
- Premature Financialisation: Corporate focus on short-term stock prices discourages long-term productive investment.
- Generational Shifts: Third-generation family firms often prioritize easier returns of financial markets over capital-intensive manufacturing.
- Systemic Uncertainty: Operating in a complex democracy with a hostile neighborhood makes long-term planning risky, causing businesses to heavily discount distant R&D payoffs.
- Others: Geopolitical uncertainty and macroeconomic volatility in last 15 years, such as the 2008 crash, COVID-19, wars, etc. have led firms to defer irreversible, long-term investments.
Way Ahead
|
