Innovation plays a pivotal role in driving economic growth and ensuring global competitiveness, especially in today’s rapidly evolving technological landscape. India, with its burgeoning population of young, tech-savvy entrepreneurs, stands on the verge of an innovation revolution. Yet, to fully unlock this potential, the nation must address critical challenges while capitalising on the many opportunities ahead.
India’s innovation ecosystem has shown remarkable progress in recent years, with significant strides in research and development (R&D), a dynamic startup culture, and increasing adoption of digital technologies. The Global Innovation Index highlights this upward trajectory, with India moving from 81st place in 2015 to 40th in 2022. This improvement is a testament to the country’s concerted efforts to foster an innovation-friendly environment, driven by government policies, private sector initiatives, and collaboration between academia and industry.
A major boost to this ecosystem is the recently launched Anusandhan National Research Fund (ANRF), with a budget of ₹1 lakh crore. This fund aims to support basic research, prototype development, and private-sector-driven research and innovation at a commercial level. Sectors such as information technology, biotechnology, and renewable energy have already positioned India as a global leader in software services, with initiatives like Digital India and Startup India laying the groundwork for entrepreneurship and providing platforms for young innovators to scale their ideas.
Despite these advances, several challenges hinder the full realisation of India’s innovation potential.
Key Challenges
- Underutilisation of Patents:
Although India has seen a rise in patent registrations, the journey from patent filing to commercialisation remains fraught with difficulties. In 2023, over one lakh patents were granted, reflecting increased awareness and faster processing by the Patent Office. However, commercialising these patents and turning them into market-ready products has lagged. As a result, innovations often remain confined to research institutions without having a tangible impact on the broader economy. - Intellectual Property Rights (IPR) Payment Imbalance:
India’s IPR payments have surged, tripling from $4.8 billion in 2014 to $14.3 billion in 2024, while its IPR receipts have grown at a much slower rate. This imbalance—where India pays significantly more for foreign patents than it earns from its own—highlights the need for better patent commercialisation and intellectual property management. The introduction of the Patent Box regime in 2016, which offers a 10% concessional tax rate on royalties from patents developed and registered in India, has helped somewhat but not nearly enough to close the gap. - Low Investment in R&D:
India’s R&D expenditure, at just 0.65% of GDP, lags far behind that of leading innovation-driven economies like South Korea, Israel, and the United States. This underinvestment limits India’s ability to develop cutting-edge technologies and weakens its competitive position on the global stage. - Weak Industry-Academia Linkages:
A major barrier to innovation in India is the disconnect between research institutions and universities. While research institutions generate groundbreaking ideas, the absence of strong ties with academia limits opportunities for collaboration, preventing these innovations from reaching the market. In contrast, regions where research institutions and universities work closely together often foster vibrant innovation ecosystems that produce market-ready technologies.
Opportunities for Growth
- Commercialisation of Patents:
Addressing the gap between patent generation and commercialisation could significantly boost India’s innovation output. Strengthening incentives for private sector involvement, improving IP management, and fostering stronger industry-academia linkages could unlock the potential of many innovations currently languishing in research institutions. The ₹1 lakh crore ANRF provides a unique opportunity to address these issues and drive applied research, particularly in sectors where India has the potential to become a global leader. - Adoption of High-Risk, High-Reward Models:
Adopting a grant challenge model, similar to the Defense Advanced Research Projects Agency (DARPA) in the U.S., could spur groundbreaking innovations. This model would encourage researchers to pursue bold, high-risk ideas that could lead to significant breakthroughs, fostering both scientific advancement and economic growth. - Enhanced Collaboration Between Research Institutions and Academia:
Integrating research institutions more closely with universities could create a more cohesive innovation ecosystem. By facilitating collaboration between students, professors, and researchers, India can foster a culture of entrepreneurship and accelerate the transfer of knowledge from the lab to the market. - Building Infrastructure for the Full Innovation Lifecycle:
To establish itself as a global destination for product innovation, India needs to build infrastructure that supports the entire innovation lifecycle—from R&D to commercialisation. This requires not only financial investment but also the creation of industrial-scale manufacturing and testing facilities within research institutions and industrial clusters. Such infrastructure would enable academic research to be translated into market-ready products, enhancing India’s global competitiveness.
Conclusion
India stands at a critical juncture in its journey toward becoming a global innovation leader. By addressing the challenges of patent commercialisation, increasing investment in R&D, and fostering stronger industry-academia collaboration, the country can unlock its full potential. The Anusandhan National Research Fund offers a promising foundation for this transformation, but success will depend on strategic deployment and sustained commitment to innovation. Through bold initiatives, India can position itself as a hub for cutting-edge technology and sustainable growth in the decades to come.
