R&D Isn’t Just About Money, It’s About Mindset

For decades, a large number of Indians have been asking why China has emerged as a “factory of the world,” though its economic conditions were similar to India’s until the seventies. Successive governments and Indian business have avoided a direct answer because that would expose their weaknesses.

An attempt is now being made to address the main issue, which is China’s focused approach to research and development and eagerness to learn from the world and India’s reluctance on both these issues.

The government has now come out with a ₹1 trillion Research Development and Innovation scheme to incentivise the private sector to invest in research and technology innovation. To begin with, an allocation of ₹200 billion has been made in the 2025-26 budget of the Ministry of Science and Technology for this purpose.

The important issue is whether or not this belated effort will bear fruit or get lost in the crowd of hundreds of other schemes that are never subjected to a strict performance audit.

The announcement came soon after the India-Pakistan conflict in May, which drew attention to the importance of indigenous research and development in arms production. The BrahMos missiles, produced by India in collaboration with Russia, proved to be crucial in the success during the four-day conflict.

Deputy Chief of Army Staff (capability development and sustenance), Lieutenant General Rahul R Singh recently drew attention to the importance of technology in military conflicts. "When the DGMO level talks were going on, Pakistan was getting live inputs of our deployment from China. So that is one place we really need to move fast and take appropriate action," he said.

On the face of it, the scheme is really a funding programme offering concessional loans, and in some cases equity support, for research. It will be governed by the newly-created Anusandhan National Research Foundation, an independent institutional body under the Ministry of Science.

“TRL-4 [Technological Readiness Level -4] projects, which usually face the highest risk for want of financial support, would be considered,” Minister for Information Technology Ashwini Vaishnaw said at a press briefing. The minister did not explain how the TRL system works and how many levels exist.

Is this funding scheme enough to energise Indian companies to join a nationwide movement towards research and innovation, and reduce India’s woeful dependence on foreign, particularly China-made technologies?

Motivation and the ability to think out of the box are factors that drive advancement in science and technology. Funding plays a supportive role, but it is not the crucial issue. The government’s scheme also overlooks a crucial issue, which is the need for a much larger research infrastructure than is available at present.

The top 20 Indian companies have many times more funds sitting as reserves than what the government has allocated for the scheme. They could have easily deployed a significant portion of the reserves for R&D if it made business sense to them. Instead, the reserves are largely deployed in debt and equity instruments.

The fact is that these companies, including highly respected firms like Reliance, TCS, Maruti, Infosys, Wipro, ITC, Hindustan Lever, and Dr. Reddy’s are content with the manner they are conducting themselves, and feel no need to think big. To understand this issue, one needs to compare it with the business growth and international dealings of top 20 companies in China, which are 10 or more times larger than India’s top 20 players.

There are two other reasons why Chinese companies were able to first mimic foreign technology and then innovate in such a manner that they surpassed the capabilities of American or European companies that had originally produced the technology.

One reason is 50:50 collaboration between Chinese and foreign companies offering learning opportunities to China-based firms who could later branch out on their own. This has not been possible in any significant manner because Indian companies were not comfortable dealing with foreign competitors.

Unlike China, the government did not push local companies to either get foreign partners or come up with innovative products on their own. China’s dictatorial Communism is often cited as the reason why it could force its companies to follow the government’s dictates.

This is true. But it is equally true that significant R&D growth could have been achieved if successive governments had shown greater political will and local businesses had been more motivated.

The latest government scheme covers a wide range of new technology areas. But a lot more needs to be done to nurture scientific talent specifically designed to meet the requirements of specific areas like semiconductors, robotics, quantum computing, deep tech and military technology. These are some of the areas covered under the scheme, apart from fields like climate change, biotechnology, biomanufacturing, health, and education.