Quantum shift: On private industry and national research spending

The Department of Science and Technology’s latest figures on India’s research profile record a milestone. In 2023-24, private industry accounted for 51.8% of national research spending — a first in India’s history — overtaking all tiers of government combined for the first time. Moreover, industry now employs more core researchers than government institutions. Transport firms are the largest corporate investors, followed by pharmaceuticals, biotechnology and information technology (IT). The break from the past is sharp. Through the 2010s, private industry contributed a little over a third of national R&D, and the ratio moved slowly. Then, between 2020-21 and 2021-22, private spending nearly doubled — from ₹46,388 crore to ₹82,975 crore — and total R&D jumped from ₹1.27 lakh crore to ₹1.95 lakh crore in a single year. R&D spends in the transport sector, which barely registered before 2020, has roughly tripled and leads the triumvirate that includes biotechnology and IT that are counted among India’s most research-intensive industries.

Officials attribute this to a post-pandemic realisation that research is essential to competitiveness, and that may be part of the story. The purported investments for ‘23-’25 also look healthy, but a change concentrated in one year looks less like a shift in corporate behaviour and more like a change in what is counted. Mandatory sustainability disclosures for large listed firms, and tighter RBI norms on reporting research, took effect at the same moment. Spending that was always occurring — in the foreign subsidiaries of Indian companies, and in the captive centres of multinationals — is only now being fully captured. Some of the surge, in other words, reflects better measurement rather than more money. Genuinely new capital is flowing too — into artificial intelligence, chip design and semiconductor fabs — though much of that is still infrastructure building and may not yet belong in the R&D column. India’s R&D stands at 0.84% of GDP, against 2.58% for China, 3.45% for the U.S. and 4.94% for South Korea; it fields 354 researchers per million people where South Korea and Israel field several thousand. The private sector’s own priorities are a further reason for caution: more was spent on advertising than on research in 2023-24. The shift will prove worthwhile if it deepens India’s pool of specialised workers and its capacity for sophisticated manufacturing, carrying the economy beyond its long reliance on supplying low-cost services. That depends less on how spending is recorded than on how many researchers the country can train. The Anusandhan National Research Foundation, with a ₹50,000-crore corpus largely to be raised from private sources, was created for precisely this purpose. Its promise now rests on delivery.