On the specific point, the minister in the Budget presentation under R and D and Innovation, said “…To implement private sector driven Research, Development and Innovation initiative announced in the July Budget, I am now allocating ₹20,000 crore.” This should be seen as a direct response to the private sector’s historically modest engagement in R&D activities. Despite various incentives, private enterprises have been reticent in committing substantial resources to research endeavours.
One innovative idea for fostering R and D in private sector is strengthening its connect with high quality private universities to ensure clear outcomes for the new initiative. Let us see how:
The Economic Survey preceding the budget highlighted concerns over this reluctance, noting that while the government contributes approximately 50% of the nation’s total R&D expenditure, business enterprises account for only 41%. Chief Economic Advisor V. Anantha Nageswaran emphasized the need for the private sector to enhance its investment in research to drive innovation and economic growth.
Bridging the industry-academia gap
For years, India’s innovation ecosystem has suffered from a disconnect between industry and academia. While private companies struggle with the high costs and risks associated with in-house R&D, universities remain underutilized despite possessing world-class faculty and research infrastructure. The newly allocated fund is designed to invigorate private sector participation by providing financial support for R&D in deep tech and sunrise industries.
By incentivizing private companies to collaborate with universities, the initiative aims to employ the strengths of both sectors. Companies will definitely be able to gain access to cutting-edge research and a skilled talent pool, while academic institutions will benefit from practical applications of their research, increased funding, and enhanced industry relevance.
Research that once remained confined to academic journals could find tangible expressions in the form of patents, prototypes, and market-ready products. Moreover, faculty members engaging in industry projects can bridge the often-lamented ‘curriculum-industry gap,’ ensuring that students graduate with skills that align with contemporary business needs.
The missing link in India’s innovation story
Private sector organizations in India, ranging from homegrown conglomerates to nimble startups, have undeniably built strong capabilities in manufacturing, IT, and pharmaceuticals. Tata Motors has developed indigenous electric vehicle (EV) technology, Biocon has emerged as a global leader in biosimilars, and Bharat Forge is pushing the boundaries of aerospace engineering. However, these success stories need to be made a norm than an exception in the whole ecosystem.
According to the Department of Science and Technology, India’s gross expenditure on R&D hovers around 0.7% of GDP—significantly lower than China (2.4%) and the United States (3.1%). Even within this, private sector contributions are disproportionately small, with most research being publicly funded.
More worryingly, private universities — many boast world-class faculty and infrastructure — remain underutilized in this endeavour. There are several instances of Deemed and privately funded universities producing world-class innovations and patents; quite a few have the potential (or have been in the real world) to be commercialized.
If the new funding initiative is used for forging deeper ties between private enterprises and private universities in India, it presents a mutually beneficial opportunity. Companies struggling with resource-intensive research can leverage university talent, while academia, often isolated in theoretical explorations, can gain exposure to real-world challenges.
A global perspective: Learning from the best
Globally, some of the most innovative breakthroughs have emerged from robust academia-industry collaborations. The Silicon Valley model, for instance, was built on Stanford University’s close ties with tech entrepreneurs, spawning giants like Google and Tesla. In Germany, the Fraunhofer Institutes serve as dedicated research hubs where academic knowledge is transformed into commercially viable technologies. Even in China, where state-driven investment in R&D is formidable, universities have been instrumental in shaping the country’s dominance in artificial intelligence and semiconductors.
If India is to replicate such successes, private firms must recognize that investing in research is not merely a cost but a strategic imperative. Investing in joint research labs, funding university-led projects, and offering corporate PhD programs can create a robust pipeline of innovation. Additionally, more universities especially private Universities should reorient their outlook and work toward applied research. Currently, many institutions prioritize publishing papers in high-impact journals, but true progress will come when these findings translate into solutions for industry.
They can start off by establishing dedicated technology transfer offices, that can incentivize patent filing. Increasing the length and breadth of entrepreneurship programs can foster a more innovation-driven academic culture in such institutions.
A future shaped by collaboration
The government’s viewpoint in promoting private sector-led R&D marks a significant shift towards a more collaborative and innovation-driven economy. By aligning financial incentives with the nation’s technological aspirations, India is poised to accelerate its journey towards becoming a global leader in innovation and self-reliance.
If Budget 2025’s R&D push is the vehicle to catalyse R and D, the first step, obviously is transition the country from being a technology consumer to a technology creator. The opportunity is immense, and the time for industry and academia to join hands has never been more urgent.
Private sector universities now have this immense opportunity in the form of strong policy support. Many of these institutions already have robust industry-academia collaborations.
Private industry can strengthen these ties by a dedicated push for innovation driven R and D, even while recognizing the gaps in their own ability to do actual science or research. Now they can get dedicated funds to work with private universities’ research teams to attain their innovations. The best response in the situation would be for corporates to use a part of their CSR funds for a dedicated push for innovation, to top government funding.
Published – February 06, 2025 04:07 pm IST
