Private R&D Spending Surpasses Government in FY24
Subject: Economy | Science & Technology
Why in News?
- According to data released by the Department of Science and Technology (DST), private sector expenditure on Research and Development (R&D) exceeded the combined contribution of governments for the first time in FY 2023–24.
- India’s Gross Expenditure on Research and Development (GERD) reached 0.83% of GDP in 2021–22, crossing the 0.8% mark for the first time since 2009–10.
- The data is part of the Research & Development Statistics 2025–26, though the complete report is yet to be released.
What is GERD?
Gross Expenditure on Research and Development (GERD) refers to the total expenditure incurred on research and development activities within a country during a financial year.
It includes expenditure by:
- Central Government
- State Governments
- Higher Educational Institutions
- Public Sector Enterprises (PSEs)
- Private Industry
Significance
GERD is a key indicator of a country’s:
- Innovation capacity
- Scientific advancement
- Technological competitiveness
- Knowledge-based economic growth
Key Trends in India’s R&D Expenditure
1. Continuous Increase in GERD
India’s R&D expenditure has witnessed a steady rise after the temporary slowdown during the COVID-19 pandemic.
Trend
- Significant increase since 2021–22.
- Continued growth through FY 2023–24.
Exam Tip: Focus on the trend rather than exact figures.
2. Growing Role of Private Industry
A major structural shift has been observed in India’s R&D ecosystem.
Trend
- Private industry’s share in GERD has steadily increased.
- In FY 2023–24, the private sector contributed more than half of India’s total R&D expenditure, surpassing the combined contribution of all levels of government for the first time.
Significance
- Reflects increasing industry-led innovation.
- Indicates greater business investment in technology and product development.
- Moves India closer to innovation-driven economic growth.
3. Sharp Rise in Industry R&D Investment
Private industry has significantly increased its expenditure on:
- Research
- Product innovation
- Technology development
- Industrial competitiveness
This demonstrates growing confidence in innovation as a driver of long-term economic growth.
4. India’s Global Position
Despite recent improvements, India’s R&D expenditure as a percentage of GDP remains significantly lower than major innovation-driven economies such as:
- China
- United States
- Japan
- South Korea
- Israel
This highlights the need for sustained investment in research and innovation.
Why is Higher R&D Investment Important?
Greater investment in research and development helps to:
- Promote innovation and technological advancement.
- Improve industrial competitiveness.
- Enhance productivity and economic growth.
- Strengthen strategic sectors such as defence, space, biotechnology and semiconductors.
- Generate high-skilled employment.
- Reduce dependence on imported technologies.
- Support the vision of Atmanirbhar Bharat.
Challenges in India’s R&D Ecosystem
- Overall R&D expenditure remains below global standards.
- Limited private investment in several sectors.
- Weak industry–academia collaboration.
- Inadequate commercialisation of research outcomes.
- Shortage of high-quality research infrastructure.
- Uneven distribution of research funding across institutions.
Role of the Department of Science and Technology (DST)
The Department of Science and Technology (DST) is the nodal agency responsible for compiling India’s official R&D statistics through the:
National Science and Technology Management Information System (NSTMIS)
Functions
- Collects national R&D data.
- Monitors research expenditure trends.
- Supports science and technology policymaking.
Data Sources
The survey covers:
- Central Government
- State Governments
- Universities
- Public Sector Enterprises
- Private Industries
Recent Expansion
Survey coverage now also includes:
- Multinational Companies (MNCs)
- Non-DSIR-recognised enterprises
Methodology
The survey follows internationally accepted standards prescribed by:
- UNESCO
- Organisation for Economic Co-operation and Development (OECD)
Significance of the Latest Trend
- Demonstrates increasing confidence of private industry in innovation.
- Reduces dependence on government funding for research.
- Encourages commercialization of indigenous technologies.
- Supports India’s transition towards a knowledge-based economy.
- Aligns with the objectives of the National Research Foundation (NRF) and Atmanirbhar Bharat.
Way Forward
- Increase India’s GERD to levels comparable with leading innovation economies.
- Strengthen public–private partnerships in research.
- Improve industry–academia collaboration.
- Expand research infrastructure and funding.
- Promote commercialization of indigenous technologies.
- Encourage startups and MSMEs to invest in R&D through fiscal incentives.
- Enhance implementation of the National Research Foundation (NRF) to create a robust research ecosystem.
UPSC Mains Question
“The increasing participation of private industry in research and development marks a structural shift in India’s innovation ecosystem. Discuss its significance and examine the challenges that continue to limit India’s research and development capacity.” (250 words)
