India’s R&D Crisis Is A Product Of The Business Class’s Lack Of Ambition

Sanjeev Sanyal, a member of the Economic Advisory Council to Prime Minister Narendra Modi, recently highlighted the disparity in research and development (R&D) intensity between Indian and global firms, with Indian firms investing much less.

While Sanyal frequently critiques the inefficiencies of Indian state institutions, he placed particular emphasis on the shortcomings of the private sector in this instance.

"There is indeed a lot of cutting edge R&D done in India — but not by Indian companies but by the global capability centres (GCCs) of foreign companies. In other words, Indian engineers and researchers are capable of doing wonders while living in India. The problem, partly, is lack of ambition of Indian business class," he noted.

This critique of the Indian private sector’s R&D performance is not unprecedented.

A recent analysis by the Foundation for Advancing Science and Technology (FAST) revealed that global R&D intensity is 2.8 times higher than that of Indian firms.

R&D intensity measures the ratio of a firm's R&D investment to its revenue. This ratio reflects the percentage of revenue reinvested in research and development.

The Economic Survey presented in Parliament earlier this year echoed similar concerns, pointing out the stark contrast between Indian and global R&D efforts.

Despite notable advancements in Indian R&D — evidenced by the significant increase in patent grants from fewer than 25,000 in FY20 to nearly 100,000 in FY24 — there remains a substantial gap in comparison with leading global economies.

Additionally, India's ranking in the Global Innovation Index has improved markedly, moving from 81st place in 2015 to 40th in 2023.

This progress is further highlighted by India’s advancement to 9th place in the Nature Index 2023, surpassing countries such as Australia and Switzerland.

The increase in India’s share of high-quality research articles — rising by 44 per cent from 2019 to 2023 — also indicates a positive trend.

However, despite these achievements, India’s R&D investment as a percentage of GDP remains low, standing at just 0.64 per cent. This figure lags significantly behind China (2.41 per cent), the United States (3.47 per cent), and Israel (5.71 per cent).

Furthermore, the private sector’s contribution to R&D in India is limited, accounting for only 36.4 per cent of the country’s Gross Domestic Expenditure on R&D (GERD), compared to China (77 per cent) and the United States (75 per cent).

This clearly shows that even with India’s advances in innovation, the private sector’s chronic lack of ambition is blocking real progress. Indian businesses, experts say, need to face a tough truth: their lack of commitment to R&D is not only an obstacle to the country’s global standing but also undermines their own long-term competitiveness.