Budget 2024: Research & innovation corpus needs clarity of modalities involved
India’s R&D spending is significantly lower than not just the US or China, but also Japan & some other emerging nations. The Budget does little to change that.
The Union Budget proposal to create a corpus of ₹1 lakh crore for the benefit of private sector research and innovation, with a 50-year interest-free loan cushion, has raised more questions than answers. Since there are no details provided or any modalities offered, the industry is likely to adopt a wait-and-watch approach on the proposal.
The corpus looks to provide long-term financing and refinancing at low or nil interest rates. The intent is to encourage the private sector to scale up research and development in sunrise domains, in a country which spends a mere 0.7% of its GDP on scientific R&D.
In the previous budget, the Government had proposed setting up the National Research Foundation (NRF) as per recommendations of the National Education Policy (NEP) at a cost of ₹50,000 crore. Till date, the modalities of that proposal are not clear.
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“One needs to understand the process of availing this corpus,” said Kris Gopalakrishnan, Infosys co-founder. His Trust (Pratiksha Trust) gave ₹450 crore for brain research to be done at the Indian Institute of Science’s Centre for Brain Research. “Hope the industry will take advantage of this,” he added.
As widely known, India’s R&D spending is significantly lower than not just the US or China, but also Japan and some other emerging countries. Traditionally, India hasn’t pulled its weight in the R&D stakes, with many large Indian conglomerates not giving it the importance it deserves.
‘Not enough, but good start’
Gopichand Katragadda, who was earlier the Group Chief Technology Officer and Innovation Head at Tata Sons and former managing director at GE’s Indian R&D centre, said it is better not to spend anything at all on R&D than spend 0.5% of the GDP or less.
“There’s not going to be any outcome if the spend is insignificant. Our R&D spend should cross 2% of the GDP,” he said. “But it’s a good start,” he said, referring to the corpus.
Without a doubt, IP laws and patents have not been on the top of the industry agenda for many years. The onus should lie with the companies to create IP. While the government is trying to support with external funding, it has to also ensure how the money is spent and who gets it. An audit has to be done on what outcomes were expected and what outcomes were delivered after the funding, said Katragadda, who is now the founder of Myelin Foundry, a deep tech startup.
Unless details are provided and the modalities are worked out, it’s better not to get too excited about the large corpus. “The NRF example is in front of us,” said Ramkumar Narayanan, former chairman of Nasscom’s Deeptech Council. “They haven’t announced how NRF will be deployed from last year’s Budget. This was supposed to be handled by the office of the Principal Scientific Adviser (PSA) but there are no details yet.”
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If India has to climb up the R&D value chart, the productization of research has to happen more rapidly. Participation in academic research has to go beyond just a handful of tier-I institutions. There’s also a need for patient capital especially when it comes to deep tech entrepreneurship. For the wider economy to prosper, R&D has to be given prime importance, especially with India looking to fly on the wings of the knowledge sector.
“Just like in the US, we also need robust publicly funded research communities that create knowledge and innovation that the companies can use,” said TV Mohandas Pai, chairperson of Manipal Global Education and a leading investor in startups. “The government funds only institutes like the IITs and some public sector institutions, for research. That’s not enough. It’s the private sector that needs to do cutting-edge research and innovation and hence they need support,” he said.
On the pharma front, India enjoys the tagline ‘Pharmacy of the world’, catering to 20% of the global supply of generic drugs. India is ranked third in global pharma production by volume, but 14th by value. For India to climb the ladder in terms of value, R&D will have to play a larger role. So is the case in the technology industry.
Darlington Jose Hector is a senior journalist.