Home / Business and Economy / India's R&D Spending Stalls Manufacturing Growth
India's R&D Spending Stalls Manufacturing Growth
20 May
Summary
- India's R&D spending is only 0.6% of GDP.
- Goal to reach 2% R&D expenditure by 2035.
- Manufacturing share in GDP declined to 13%.
India's manufacturing sector faces significant constraints due to insufficient investment in research and development (R&D), with current spending at only 0.6% of GDP. This low expenditure is a key factor behind the sector's stagnant growth and its declining share in the national GDP, which has fallen to 13% from 16% over the past decade. Countries like Bangladesh and Vietnam have seen manufacturing expand its GDP contribution in the same period.
To revitalize its manufacturing capabilities, India has set an ambitious target to raise R&D expenditure to 2% of GDP by 2035. Achieving this goal requires a substantial increase in private sector participation and the development of stronger innovation ecosystems. Enhancing STEM education, fostering deeper industry-academia collaboration, and streamlining the research-to-commercialization pipeline are critical steps. This transition to innovation-driven manufacturing is essential for securing long-term global competitiveness and higher value addition.
Comparatively, global leaders like the US and China invest significantly more in R&D, spending over 3% and 2.5% of their GDP respectively. India's low patent share globally underscores the need for increased researcher density and improved collaborative efforts. The current R&D spending by Indian companies is concentrated in a few sectors, leading to incremental innovation rather than groundbreaking advancements. Addressing structural constraints such as risk aversion and talent outflow is crucial for a successful transformation.
