Has India’s pursuit of innovation acquired its best shot of adrenaline due to the authorities’s Rs 1 lakh crore Research, Development and Innovation (RDI) fund unveiled final week?
The New Indian Express hauled in the knowledge for interrogation solely to study that this is not a contemporary allocation. In truth, a few of the sums are being spent or could have already been spent. The official launch itself signifies as a lot.
Moreover, of the Rs 1 lakh crore, it explicitly mentions how Rs 50,000 crore will likely be mobilized, however stays zip-lipped about the remaining Rs 50,000 crore.
Of the Rs 50,000 crore, Rs 14,000 crore will come from the central authorities, and the relaxation is anticipated from non-governmental sources similar to business, philanthropists and by means of a number of streams, together with the Anusandhan National Research Foundation (ANRF) Fund, Innovation Fund, Science and Engineering Research Fund, and Special Purpose Funds.
And here is the smoking gun. The proposed Rs 50,000 crore will likely be mobilized throughout 2023-28. It means the quantity consists of allocations that had been made in the earlier budgets, and likelihood is, a few of it might have already been spent.
That’s as a result of the official launch itself lists out a sequence of nationwide missions in rising and high-impact sectors the place it intends to strengthen indigenous R&D capabilities. Take for occasion, the National Quantum Mission specializing in strengthening quantum research infrastructure to develop quantum computer systems, safe communication methods, and superior supplies. But the mission was initially authorised by the Cabinet in April, 2023 with an allocation of Rs 6,004 crore unfold between FY24 and FY31.
Likewise, the National Mission on Interdisciplinary Cyber-Physical Systems (NM-ICPS) was authorised approach again in December 2018, and carried out by the Department of Science and Technology with a complete outlay of Rs 3,660 crore, a few of which stays unspent.
Similarly, the Deep Ocean Mission, launched in September 2021 by the Ministry of Earth Sciences to discover and utilise ocean sources, has an funding allocation of Rs 4,077 crore unfold over 5 years. What’s unclear is whether or not the first section (2021-2024) allocations of Rs 2,823 crore had been absolutely disbursed.
The newest RDI fund emphasizes Artificial Intelligence (AI) as a nationwide precedence. Interestingly, the authorities allotted Rs 10,000 crore in Budget 2024 over 5 years for the IndiaAI programme apart from launching the National AI Portal, National AI Mission, and NITI Aayog’s AIForAll technique with sectoral give attention to well being, agriculture, schooling, sensible cities, and mobility.
Then there’s the India Semiconductor Mission established in 2021, which was backed by a Rs 76,000 crore Production Linked Incentive scheme. Of this, Rs 65,000 crore has already been dedicated, which implies the remaining quantity could have been included as a part of the Rs 1 lakh crore fund.
Finally, the RDI scheme itself is not new. It was first authorised by the Cabinet in July and goals to stir the pot of personal sector-driven R&D ecosystem, deal with limitations in important areas for indigenous development, and concurrently scale back import dependency.
More than its funding muscle, the scheme is noteworthy for its change in flavour. In a first, the authorities by way of RDI will present long-term financing at low or nil rates of interest to spur non-public sector funding in R&D. As Prime Minister Narendra Modi famous throughout its launch, “For the first time, capital is also being made available for high-risk and high-impact projects.”
Financing can take the form of fairness infusion in startups, or cowl as much as 50% of assessed undertaking price for transformative RDI tasks. Interestingly, the fund with its 50-year tenor and concessional capital circulation by means of ANRF aspires to vary the economics of deep-tech innovation or rework sectors similar to semiconductors, quantum applied sciences, and house tech.
Above all, one distinctive function of the RDI Scheme is that it takes a departure from the age-old follow of issuing grants, fellowships and short-term loans and assumes the position of a savvy investor to catalyse innovation. Such a transfer is extremely wanted to assist the nation tide over the middle-income entice, which the World Bank warns India is at the moment in.
In quick, the authorities will don the position of a sovereign enterprise capitalist, courting threat in lieu of earnings and untold success.
For a nation with certainly one of the lowest spends on R&D, that is excellent news. Until lately, India’s expenditure on R&D has been woefully insufficient. Per estimates, India spends nearly 0.8% of GDP on R&D, or simply about $7 billion yearly as in opposition to the US’ $625 billion and China’s $335 billion. Within this, about 44% comes from the central authorities, 7% from states, and 9% from increased schooling, whereas the business contributes 36%, which is much under the world common of 70%.
This regardless of the indisputable fact that India has an enviable expertise pool. We rank third globally in science and engineering PhDs, after the US and China, whereas the variety of patents filed in India shot up almost thrice from Rs 24,326 in FY21 to Rs 68,176 in FY25, underscoring a main surge in home innovation.
The excellent news although is that India’s gross expenditure on R&D is on the rise and has greater than doubled in the final ten years from Rs 60,197 crore in FY11 to Rs 1,27,381 crore in FY21. But it wants to enhance additional in order to leap from the providers sector to an innovation-driven financial system.
Currently, the providers sector contributes round 55% of India’s GDP, whereas the manufacturing sector has been caught at 15-17% for many years. In distinction, superior nations like the US, and Germany have a thriving manufacturing sector that accounts for about 25% of their GDPs.