INDIA'S INNOVATION ECOSYSTEM: CHALLENGES AND WAY FORWARD

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Picture Courtesy: THEHINDU

Context

Despite rising rankings and patent filings, India’s innovation ecosystem is hindered by low private-sector investment and poor commercialization of academic research.

What is the Current State of India's Innovation Ecosystem?

Global Performance & Rankings

Global Innovation Index (GII) 2025: India rose to 38th place among 139 economies, a leap from 81st in 2015. (Source: WIPO)

Research Output: India ranks 3rd globally in scientific publications and scholarly output, and 3rd in the number of PhDs awarded annually. (Source: PIB)

Intellectual Property: In 2024, India ranked 4th in trademark filings, 6th in patents, and 7th in industrial design registrations worldwide. (Source: Newsonair)

The Funding Paradox

GDP Share: Gross Expenditure on R&D (GERD) remains stuck at approximately 0.64% of GDP. (Source: Economic Survey 2025-26).

Public vs Private Imbalance: The government sector bears roughly 64% of the R&D cost, while the private sector contributes only about 36%. (Source: PIB)

• In most innovation-led economies—such as the United States, China, Japan, and South Korea—business enterprises contribute more than 70% of the Gross Expenditure on Research and Development (GERD).

Reforms & Initiatives

Anusandhan National Research Foundation (ANRF)

 In March 2026, the ANRF-PAIR (Partnerships for Accelerated Innovation and Research) Hubs were inaugurated to link premier institutions with state universities.

₹1 Lakh Crore Research, Development, and Innovation (RDI) Scheme

Launched in November 2025, to provide long-term, low-interest loans to incentivise private-sector-led innovation in "sunrise sectors".

National High-Tech Missions

Commitments have been made for the India Semiconductor Mission (₹76,000 crore), IndiaAI Mission (₹10,371 crore), and the National Quantum Mission (₹6,003 crore). (Source: PIB)

Why is Private Sector Investment in R&D Low?

Private sector R&D investment is low due to a small national R&D expenditure and an over-reliance on government funding for innovation.

Focus on Labour-Intensive Models

Many Indian startups and "unicorns" are built on business models that use labour arbitrage (e.g., instant delivery services) rather than investing in high-risk, long-term technological innovation. (Source: NITI Aayog).

Limited Global Influence

While domestic patents are rising, India's global footprint is small. In 2024, India filed only 4,547 Patent Cooperation Treaty (PCT) applications, which are crucial for global commercialization. This number is a fraction of China's (over 70,000) and the USA's (over 54,000). (Source: WIPO 2025)

What are the Key Structural Challenges?

Missing "Lab-to-Market" Bridge

India lacks robust mechanisms for technology transfer and venture creation. Scientific research often remains confined to public institutions without being translated into market-ready products.

Human Capital Deficit

India ranks poorly in key human capital indicators, standing at 95th in knowledge-intensive employment and 80th in the number of full-time researchers. (Source: GII 2025)

Gender Disparity in STEM

India ranks a low 101st out of 119 economies in the employment of women with advanced degrees. While schemes like WIDUSHI and WISE-KIRAN exist, retaining female talent in deep-tech industries remains a major challenge.

Way Forward 

Execute the ANRF Mandate

The success of the Anusandhan National Research Foundation (ANRF) depends on its ability to raise its mandated ₹36,000 crore (72% of its corpus) from the private sector. This requires creating attractive tax structures and co-investment models.

Implement the PAIR Model

The Partnerships for Accelerated Innovation and Research (PAIR) program, with its hub-and-spoke model, can help democratize R&D by upgrading infrastructure in emerging universities where the majority of students are trained.

Restructure Defence R&D

Implement the K. VijayRaghavan Committee's recommendations to limit DRDO's role to core research and establish a new consortium to allow private players and industry to lead prototyping and product development.

Focus on Quality over Quantity

Shift focus from the raw volume of patents to securing Standard Essential Patents (SEPs) in emerging technologies like 6G, which is a true measure of global technological influence.

Conclusion

For India to achieve 'Viksit Bharat' goal, the private sector must overcome risk aversion and invest patient capital in long-gestation R&D to transition the economy into a deep-technology powerhouse.

Source: THE HINDU