Hurdles to innovation

Need to foster an ecosystem for innovation

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India’s innovation story has become one of the country’s quiet success stories. Over the past decade, India has climbed from 81st to 38th position in the Global Innovation Index. Scientific publication output has increased six-fold since 2010, making India the world’s third-largest producer of scientific publications. Patent filings by Indian applicants have nearly tripled, rising from 24,326 in 2020–21 to 68,176 in 2024–25.Yet there is a paradox at the heart of this success story. India continues to produce impressive scientific and technological outputs while investing relatively little in R&D. Gross Expenditure on Research and Development (GERD) has remained stuck at around 0.64 per cent of GDP for almost a decade, far below the levels observed in technologically advanced economies and even in emerging competitors such as China, where R&D expenditure exceeds 2.4 per cent of GDP. More importantly, researchers increasingly point to something deeper than funding constraints: an institutional environment that often makes doing research unnecessarily difficult.Two recent studies bring this problem into sharp focus. The first is a nationwide survey conducted jointly by the Indian National Science Academy (INSA), the National Academy of Sciences, India (NASI), and NITI Aayog covering 878 researchers. The second is NITI Aayog’s report, Ease of Doing Research and Development in India, based on consultations with nearly a hundred state universities. India’s challenge is not a shortage of scientific talent. It is the difficulty of converting that talent into sustained scientific and technological capability.The wait before the waitIf there is one statistic that captures the problem, it is the time researchers spend waiting. According to the INSA–NASI–NITI Aayog survey, researchers wait an average of seven months simply to learn whether a grant proposal has been approved. Once approved, sanction orders may take another six months to arrive and, in some cases, much longer. Funds that lapse at the end of a financial year often take months to be restored. Final project payments may remain pending for more than a year. The cumulative effect is striking. In a five-year research project, administrative delays can consume well over two years.The NITI Aayog report correctly identifies these bottlenecks and proposes procedural reforms. Yet digital portals and simplified procedures cannot by themselves change a bureaucratic culture in which officials are often rewarded for avoiding mistakes rather than enabling research. The problem is not only process; it is incentives.Why more money is not enoughThe most ambitious recommendation in the NITI Aayog report is to increase India’s GERD from around 0.6–0.7 per cent of GDP to 2 per cent within the next four to five years.Successive governments have promised substantial increases in R&D expenditure for decades. Yet India has not crossed even the 1 per cent threshold. Moreover, several public research agencies already struggle to utilize their existing allocations fully.India’s research challenge is not simply a shortage of money. It is equally a problem of governance and absorption capacity. Tripling expenditure without fixing implementation weaknesses risks creating inefficiencies rather than breakthroughs.The missing private sectorIn most OECD economies, industry finances more than 70 per cent of national R&D expenditure. In India, the figure remains around 36 per cent. Yet the gap cannot be bridged merely through tax incentives and exhortation. Weak university-industry linkages, uncertain returns from long-term R&D investments, and limited co-investment mechanisms continue to discourage corporate participation.The challenge, therefore, is not persuading researchers to work with industry. It is creating an industrial ecosystem willing to invest in research in the first place.A two-speed research countryThe NITI Aayog report reveals another uncomfortable reality: India increasingly resembles a two-speed research system.At one end are elite institutions such as the IITs and the Indian Institute of Science, which dominate patenting, commercialization, and advanced research output. At the other end are hundreds of state universities that account for the bulk of higher education enrolment but contribute relatively little to research.A more durable solution requires strengthening research capacity within state universities themselves.Publish or perish, not innovateOne of the most underappreciated barriers to innovation lies in the incentives facing universities. Yet the deeper issue is that universities are rewarded primarily for publications rather than innovation. Although NIRF includes patents and intellectual property indicators, its ranking methodology places much greater weight on publications and citations than on technology commercialization.The result is predictable: India produces research papers at scale but struggles to convert knowledge into commercially valuable technologies.Subash is Professor of Economics at IIT-Madras; Mani is Visiting Professor Ahmedabad UniversityPublished on August 5, 2026