R&D investment needs liberal rules

The central government needs to liberalise its rules in order to bring in more private sector investment in Research and Development (R&D) and accelerate the pace of research, the Economic Survey has observed.

The report that for the first time contains a separate chapter on Science and Technology, notes that most of the R&D funding came from the government, unlike other advanced countries where private sector invest  significantly on research and development.

Public expenditure on research remains stagnant between 0.6-0.7% of the GDP  since the past two decades.

It is not only well below major nations like US (2.8% of GDP), China (2.1), Israel (4.3) and Korea (4.2), but also private investment in research is severely lagged.

According to one analysis, there are 26 Indian companies in the list of the top 2,500 global R&D spenders compared to 301 Chinese companies.

As many as 19 of these 26 firms are in just three sectors   -pharmaceuticals, automobile and software.

"The private sector should be incentivised to both undertake more R&D but to also support STEM (Science, Technology, Engineering, and Mathematics) research through Corporate Social Responsibility fund," it suggests.

Current tax law favours CSR investment into R&D, but the types of R&D activities eligible can be expanded.

Besides, the government can join hands with the private sector to create new R&D funding opportunities which are also in line with private sector interests.

Also, rules like those requiring L1 (Lowest bidder) for procurement are simply not geared to providing the flexibility that is needed at the frontiers of research where speed, product quality and reliability make all the difference between success and failure.

The report also takes note of the virtual death of R&D in the universities that have been reduced to teaching establishments with barely any research.

On the contrary, there are specialised R&D units but without the energy and innovation of a student.

This disconnection has severely impaired both teaching as well as the research enterprise in the country.

The Survey has proposed six dedicated scientific missions including two on dark energy and mathematics to boost basic research.

Other proposed missions are on genetics, energy storage systems, cyber-physical system and agriculture.