India’s R & D Estimates are an Incomplete Picture
Context:
- India’s research and development (R&D) expenditure-to-GDP ratio of 0.7% is incredibly low when compared to other major nations and much below the global average of 1.8%.
Problems with the current system:
- The main factor is underinvestment in R&D by the corporate sector. In affluent nations, the business sector makes up about two-thirds of the gross domestic expenditures (GERD), whereas this percentage is only 37% in India. Yet, there is evidence indicating that India’s GERD statistics are inflated.
- The National Science Foundation (NSF) of the United States reported in a 2022 infobrief that American multinational corporations (MNCs) invested $9.5 billion in R&D in India in 2018 and $9.8 billion the next year.
- MNCs from other industrialised countries invest in R&D in India. The Department of Science and Technology (DST) has provided an estimate of foreign MNC R&D spending in 2017–18, which is under 10% of what American multinationals have acknowledged spending in India on R&D.
- The National Science and Technology Management Information System (NSTMIS) of the DST compiles GERD statistics in India. Information on R&D is easier to obtain for the public sector, higher institutions, and government organisations. It is difficult to acquire data from the private sector. The stated R&D estimates are severely lacking due to two main factors.
- The method utilised to identify them excludes all of the R&D performing companies. The NSTIMS uses both the Department of Scientific and Industrial Research (DSIR) list of recognised R&D units and the Prowess database of the Centre For Monitoring Indian Economy (CMIE) Pvt. Ltd. for this.
For two reasons, there could not be many real R&D performers on the DSIR list:
- Companies who don’t find the government’s incentives to be compelling enough or that are hesitant to provide the DSIR access to sensitive data may not be compelled to sign up with the DSIR.
- For R&D firms in services like software and R&D services, the requirement of having different infrastructure for R&D to distinguish it from their regular company may be hard. Several companies involved in cutting-edge technological R&D could be considered services.
Moving ahead:
- For India’s R&D statistics to adequately reflect the R&D ecosystem, immediate and long-term efforts are needed.
- The NSTMIS should soon include information on patents awarded in both India and the U.S. to its current methodology for selecting R&D performing enterprises.
- R&D statistics shouldn’t solely be reliant on survey responses, even if surveys can collect a lot more information about innovative activities. Instead, using the mandatory disclosures that the corporations must provide to the MCA, annual R&D estimates can be produced.
- In order to assure compliance and appropriate reporting, technology can be utilised like in the case of redesigned income-tax return forms where numerous components are interlinked.
- Also, it should be made essential to incorporate information on R&D expenditures that must be appropriately disclosed to regulatory bodies in the environmental, social, and governance (ESG) ranking of businesses.
Conclusion:
- One of the key components of our quest to create a $5 trillion economy by 2025 is maximising India’s R&D potential.
