India's Low R&D Spending Threatens Manufacturing Growth
Low R&D spending a key challenge for India's manufacturing growth
Image: Asianet Newsable
India's manufacturing sector faces significant challenges due to low research and development (R&D) spending, which stands at around 0.6-0.7% of GDP. Despite a rise in manufacturing output, the sector's GDP share has fallen from 16% in 2015 to nearly 13% in 2024. Experts recommend increasing R&D investment to 2% of GDP by 2035 to enhance competitiveness.
- 01India's manufacturing output increased from approximately $328 billion to $493 billion between 2015 and 2024.
- 02Countries like the United States, China, and South Korea spend between 2.5% and 5% of GDP on R&D, significantly higher than India's current spending.
- 03The report suggests that India should enhance private-sector participation and improve research-to-commercialization pipelines.
- 04India's innovation largely follows global trends rather than leading them, with a low global patent share of around 4%.
- 05The government has launched initiatives like the Rs 1 lakh crore Research Development and Innovation Scheme Fund to boost private sector-driven R&D.
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India's manufacturing sector is grappling with a critical challenge: low research and development (R&D) spending, which is currently around 0.6-0.7% of GDP. This has contributed to a decline in the manufacturing sector's GDP share from 16% in 2015 to nearly 13% in 2024, despite an increase in output from approximately $328 billion to $493 billion during the same period. The report by CareEdge Ratings emphasizes that India's R&D expenditure is significantly lower than that of global leaders like the United States, China, and South Korea, which invest between 2.5% and 5% of GDP on innovation. To remain competitive, India must aim to raise its R&D spending to 2% of GDP by 2035. Recommendations include enhancing private-sector participation, fostering industry-academia collaboration, and developing sector-specific innovation hubs. The Indian government has initiated several programs to strengthen the research ecosystem, including the Rs 1 lakh crore Research Development and Innovation Scheme Fund and the Anusandhan National Research Foundation, aimed at promoting advanced manufacturing and technology-led growth.
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Increased R&D spending could lead to enhanced innovation and competitiveness in India's manufacturing sector, benefiting industries and the economy.
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