India's Innovation Economy Faces Significant Challenges Despite Progress
The big challenge before India’s innovation economy
Hindustan Times
Image: Hindustan Times
India has made notable strides in global innovation, ranking 38th in the Global Innovation Index 2025. However, challenges remain, including a reliance on public sector R&D funding and a limited number of firms driving innovation. Strengthening private investment and enhancing commercialization are essential for sustainable growth.
- 01India ranks 38th in the Global Innovation Index 2025, up from 81st in 2015.
- 02Public sector accounts for 63.6% of India's gross domestic expenditure on R&D (GERD).
- 03Only 2.5% of startups have progressed from validation to scaling.
- 04India has four innovation clusters in WIPO's global top 100 but lags behind leading global hubs.
- 05The country needs to enhance private investment and commercialization to improve its innovation landscape.
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India has shown significant improvement in global innovation rankings, moving from 81st in 2015 to 38th in the Global Innovation Index 2025, and is recognized as an innovation overperformer by the World Intellectual Property Organisation (WIPO). Despite these advancements, the country faces critical challenges. Public sector funding dominates R&D, comprising 63.6% of gross domestic expenditure on R&D (GERD), which stands at only 0.65% of GDP, far less than major economies like the US, Japan, and China. Furthermore, while India boasts over 120 unicorns and ranks 9th globally for startup financing, only 2.5% of startups transition from validation to scaling, indicating a bottleneck in commercialization. India's innovation clusters, including Bengaluru, Delhi, Mumbai, and Chennai, rank in WIPO's top 100 but fall short in patenting intensity and venture capital activity compared to global leaders. To enhance its innovation ecosystem, India must focus on increasing private investment and improving the translation of research into commercially viable products.
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The challenges in India's innovation system could hinder job creation and economic growth, affecting aspiring entrepreneurs, researchers, and the broader workforce.
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