The “Research and Development (R&D) Expenditure Ecosystem” report was unveiled during the international introduction of the Global Innovation Index (GII)–2019 by the Economic Advisory Council to the Prime Minister (EAC-PM). The report aims to address data gaps in R&D information, analyze expenditure patterns across various sectors and their limitations, and layout the method for achieving the desired goal of 2% of GDP spent on R&D by 2022.
About The EAC-PM
The EAC-PM is a non-constitutional, non-statutory, independent body put together to provide advice on economic and related matters to the Indian Government, particularly the Prime Minister. The current council includes Dr. Bibek Debroy (Chairman), Shri Ratan P. Watal (Member Secretary), Dr. Rathin Roy (Part-Time Member), Dr. Ashima Goyal (Part-Time Member) and Dr. Shamika Ravi (Part-Time Member). The EAC-PM’s responsibilities revolve around analyzing economic and other issues referred by the Prime Minister, addressing macroeconomic importance issues, and performing any other tasks required by the Prime Minister.
Recommendations Outlined in The Report
The report proposes that the growth in R&D expenditure should align with the economy’s growth. By 2022, it should constitute at least 2% of the GDP. To stimulate investment from the private sector in R&D, it suggests mandating medium and large enterprises to invest a minimum percentage of their turnover in R&D.
Model R&D Expenditure Statistics
| Country | R&D Expenditure (% of GDP) |
|---|---|
| USA | 2.8% |
| China | 2.1% |
| Israel | 4.3% |
| Korea | 4.2% |
Background and Rationale
Investments in R&D are crucial drivers of economic growth, affecting productivity, exports, employment, and capital formation. Though India’s investment has consistently increased, it still lags behind nations like the US, China, Israel, and Korea as a fraction of GDP. Furthermore, the government is the significant player in India’s R&D spending, contrasting with advanced countries where private sectors dominate.
In 2018, India’s Prime Minister emphasized the need for collaborative R&D by Central Public Sector Enterprises (CPSEs), stressing partnerships with Indian Institute of Technologies and Universities. This led to the establishment of 154 innovation cells by CPSEs, focusing on market-oriented research. From 2014-15 to 2017-18, there was a 116% increase in R&D spending by CPSEs, with the petroleum and power sector CPSEs emerging as the most significant contributors. This indicates a need for more CPSEs to spend more on R&D.
