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RESEARCH & DEVELOPMENT ‘Jugaad’ no more, increasing R&D spend for innovation

Mar 26, 2021

China, in its recent draft of 14th Five Year Plan mentioned an annual increase of more than 7% in its R&D spending. India, who has been competing head-to-head with China for the past couple of years, is not even close to China when it comes to the R&D spend every year. The opinion feature offers a statistical review of India’s standing in the R&D spend and explains why an increase in the spend is necessary for ground-breaking technology breakthroughs.

China, in its 14th Five-Year Plan, is targeting an annual increase of more than 7% in R&D spending for each of the next five years. This spending would be to push ‘major breakthroughs’ in technology. China’s spending on R&D has so far surged to 10.3% to 2.44 trillion Chinese Yuan ($378 billion) and accounted for 2.4% of the GDP in 2020, as per official statistics. Now, the central government expenditure on basic research will increase to 10.6%, according to Li Keqiang, Premier of the State Council, People’s Republic of China. Besides, they would also be improving the tax incentives for manufacturers to invest in.

India, a country in a head first race with China, does not even come in the top 10 when investing in R&D. Yes, invest and not spend. Because, an increase in the R&D spend will ultimately positively affect the country’s technology prowess in the medium- and long-term. In the race of investing in innovation, India falls significantly behind with an investment of only 0.65% of the GDP despite the Centre’s higher contribution to Gross Domestic Expenditure on R&D (GERD). According to a World Bank report, countries like the US spent 2.83% of their GDP in 2018, and Europe spent 2.18% of its GDP in 2018. We are strong contenders when it comes to innovation. In a time where India has a 60% young workforce, brains for innovation is not the problem. The problem could be associated with the ‘jugaad mentality’ that the country runs on. But with the expanding global investment in technology, the country cannot make-do anymore with the mindset.

India needs to shift from being 48th among 131 innovating countries (according to Global Innovation Index 2020). We need to change the way we look at innovation and significantly ramp up the expenditure on R&D to live up to the status of the fifth-largest economy. Our GERD investments need to increase at least 68%, like the top 10 economies, from 37% at present. Likewise, business sectors need to contribute close to 58% and 53% respectively to R&D personnel & researchers, elevating from the current 30% and 34%, respectively. According to the World Economic Forum 2019-20 report, India has filed only 45,000 reports compared to China’s 1.33 million patents, the US’s 0.6 million patents and Japan’s 0.32 million patents filed. Coming up with innovation is not just enough, having ownership of it prior to the competitors is essential, too. India needs to start filing at least 35% more patents in addition to the current 36% to ensure it can meet the eye of its global competitors.

While we know that China has lost its status as ‘global exporters’, it hasn’t deterred them from innovating and pushing forward in the race, which is admirable and learnable from them. We, too, must mimic them on this motivation and rely on our potentials. Jugaad could only take us this far or maybe a little more, but having an innovation system in place will help us underpin our strategic & technological abilities.

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