{"id":87780,"date":"2026-10-31T18:20:49","date_gmt":"2026-10-31T12:50:49","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=87780"},"modified":"2026-10-31T18:29:05","modified_gmt":"2026-10-31T12:59:05","slug":"india-innovation-manufacturing-rd","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/31-10-2026\/india-innovation-manufacturing-rd","title":{"rendered":"India&#8217;s Innovation Malaise: Need For Globally Competitive Manufacturing"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Science &amp; Technology<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India&#8217;s position at <strong>38th in Global Innovation Index (GII), 2026<\/strong> has renewed debate over inadequate R&amp;D expenditure, weak private-sector participation and the need for manufacturing-led innovation.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About the Global Innovation Index (GII)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It is published annually by the World Intellectual Property Organization (WIPO) and evaluates the innovation capabilities and performance of economies.<\/li>\n\n\n\n<li>It aims to assess how effectively countries develop and translate innovation capabilities into economic and technological outcomes.<\/li>\n\n\n\n<li>It highlights that innovation depends on a broader business environment, infrastructure and industrial capabilities along with research institutions.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India&#8217;s Performance in GII 2026<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has emerged as an important innovation economy, particularly among<strong> lower-middle-income countries.<\/strong><\/li>\n\n\n\n<li>However, structural weaknesses remain:\n<ul class=\"wp-block-list\">\n<li><strong>R&amp;D Expenditure:<\/strong> India&#8217;s Gross Expenditure on R&amp;D (GERD) is approximately <strong>0.6\u20130.7% of GDP,<\/strong> considerably below South Korea (around 5%), China (around 2.7%) and other advanced economies.<\/li>\n\n\n\n<li><strong>Private-sector Participation:<\/strong> Businesses contribute approximately 41% of India&#8217;s total R&amp;D expenditure, compared with 70\u201380% in several innovation-intensive economies.<\/li>\n\n\n\n<li><strong>Innovation Ecosystem:<\/strong> India performs relatively well in areas such as ICT services exports, start-ups and knowledge-intensive services but needs stronger manufacturing and technological capabilities.<\/li>\n\n\n\n<li><strong>Innovation Clusters:<\/strong> India has <strong>4 clusters<\/strong> <strong>(i.e. Bengaluru, Delhi, Mumbai and Chennai)<\/strong> in the world&#8217;s top innovation clusters of GII, demonstrating India&#8217;s growing research potential.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Translating scientific knowledge into commercially successful products remains a major challenge despite these achievements.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Understanding the Link Between Manufacturing and Innovation<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Innovation and manufacturing have a mutually reinforcing relationship. Globally competitive manufacturing often provides the economic foundation for sustained private-sector R&amp;D investment.<\/li>\n\n\n\n<li><strong>Important Lessons From East Asian Experiences:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>South Korea:<\/strong> R&amp;D expenditure was approximately 0.26% of GDP in 1965 and 0.77% in 1980. During this period, exports increased from 2.6% of GDP in 1960 to 27.7% in 1980. R&amp;D intensity crossed 2% only around 1995.<\/li>\n\n\n\n<li><strong>China:<\/strong> It became the world&#8217;s largest manufacturing economy in 2008, when its R&amp;D intensity was approximately 1.42% of GDP.<\/li>\n\n\n\n<li><strong>Japan and Taiwan:<\/strong> Both strengthened their manufacturing and export capabilities before establishing themselves as major technological and innovation centres.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>These experiences suggest that export competitiveness, manufacturing scale and industrial capabilities can generate the resources and incentives necessary for higher R&amp;D investment.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Does India&#8217;s Private R&amp;D Investment Remain Low?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Several structural constraints discourage Indian businesses from investing in research:\n<ul class=\"wp-block-list\">\n<li><strong>High Input Costs:<\/strong> Import duties on critical raw materials, expensive electricity and costly logistics increase manufacturing costs.<\/li>\n\n\n\n<li><strong>Regulatory Burden:<\/strong> Complex compliance requirements, approval delays and regulatory uncertainty increase the cost of establishing and operating factories.<\/li>\n\n\n\n<li><strong>Costly Capital:<\/strong> Relatively expensive borrowing makes long-term, uncertain R&amp;D investments less attractive.<\/li>\n\n\n\n<li><strong>Limited Global Market Access:<\/strong> High production costs prevent domestic manufacturers from competing effectively with international producers.<\/li>\n\n\n\n<li><strong>Protection-driven Competitiveness:<\/strong> Tariffs and domestic regulatory protections sometimes allow firms to survive without investing sufficiently in productivity, quality and technological advancement.<\/li>\n\n\n\n<li><strong>Risk Aversion:<\/strong> Limited tolerance for commercial failure further discourages experimentation and long-term innovation.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Consequently, inadequate private R&amp;D investment is partly a symptom of deeper weaknesses in India&#8217;s business and manufacturing environment.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Government Initiatives Supporting Innovation<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has undertaken several initiatives to strengthen its innovation ecosystem:\n<ul class=\"wp-block-list\">\n<li><strong>Anusandhan National Research Foundation (ANRF):<\/strong> Promotes research collaboration between universities, research institutions and industries.<\/li>\n\n\n\n<li><strong>Research, Development and Innovation (RDI) Scheme:<\/strong> Provides substantial financial support to encourage private-sector investment in strategic and emerging technologies.<\/li>\n\n\n\n<li><strong>Production Linked Incentive (PLI) Scheme:<\/strong> Encourages domestic manufacturing, investment, scale and technological upgrading across selected sectors.<\/li>\n\n\n\n<li><strong>Startup India:<\/strong> Promotes entrepreneurship, innovation and a supportive start-up ecosystem.<\/li>\n\n\n\n<li><strong>Atal Innovation Mission:<\/strong> Encourages innovation and entrepreneurial capabilities through incubation centres and Atal Tinkering Labs.<\/li>\n\n\n\n<li><strong>India Semiconductor Mission:<\/strong> Supports the development of domestic semiconductor manufacturing and design capabilities.<\/li>\n\n\n\n<li><strong>National Quantum Mission:<\/strong> Promotes research and development in quantum technologies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>These initiatives can strengthen India&#8217;s innovation ecosystem, provided they are complemented by improvements in the broader business environment.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Emerging Challenges<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Despite policy interventions, important challenges persist:\n<ul class=\"wp-block-list\">\n<li>Weak industry-academia collaboration and limited commercialisation of research.<\/li>\n\n\n\n<li>Dependence on imported advanced machinery, components and critical technologies.<\/li>\n\n\n\n<li>Fragmented supply chains and inadequate industrial infrastructure.<\/li>\n\n\n\n<li>Regulatory uncertainty and difficulties in enforcing contracts.<\/li>\n\n\n\n<li>Limited integration of MSMEs into global value chains.<\/li>\n\n\n\n<li>Growing technological competition and rapid AI-driven changes in innovation cycles.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Artificial intelligence is shortening product-development cycles, making speed, adaptability and efficient execution increasingly important determinants of competitiveness.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Forward: Building Globally Competitive Manufacturing Ecosystems<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India needs to move beyond treating R&amp;D expenditure as an isolated indicator of innovation and focus on creating an enabling environment for globally competitive manufacturing.<\/li>\n\n\n\n<li><strong>Key priorities include:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Regulatory Simplification:<\/strong> Reduce unnecessary approvals, compliance requirements and policy uncertainty through predictable, transparent regulations.<\/li>\n\n\n\n<li><strong>Competitive Input Costs:<\/strong> Rationalise tariffs on essential industrial inputs, improve electricity quality and affordability, and reduce logistics costs.<\/li>\n\n\n\n<li><strong>Develop Industrial Clusters:<\/strong> Establish large, integrated manufacturing ecosystems with reliable infrastructure, efficient logistics, simplified clearances and access to skilled labour.<\/li>\n\n\n\n<li><strong>Strengthen Private R&amp;D:<\/strong> Promote industry-led research through targeted incentives, public-private partnerships, technology transfer and stronger university-industry collaboration.<\/li>\n\n\n\n<li><strong>Improve Ease of Doing Business:<\/strong> Address delays in taxation, contract enforcement, land access and dispute resolution.<\/li>\n\n\n\n<li><strong>Promote Export-oriented Manufacturing:<\/strong> Integrate Indian firms into global value chains and encourage competition based on productivity, quality and technological advancement.<\/li>\n\n\n\n<li><strong>Encourage Risk-taking:<\/strong> Develop stronger venture capital networks, support deep-tech start-ups and create an institutional environment that does not excessively penalise genuine business failures.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India&#8217;s innovation ambitions cannot be achieved through increased government funding for R&amp;D alone. It needs first to create an environment where businesses can manufacture efficiently, compete globally and generate sufficient returns to reinvest in research.<\/li>\n\n\n\n<li>The transition from a protected manufacturing economy to a globally competitive production powerhouse is essential for transforming India from an innovation participant into an innovation leader.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q] <\/strong>Globally competitive manufacturing is a prerequisite for sustainable innovation and increased private-sector investment in Research and Development (R&amp;D) in India. Examine.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/www.hindustantimes.com\/opinion\/the-actual-cause-of-india-s-r-d-malaise-101793385190261.html\" target=\"_blank\" rel=\"noopener\">Source: HT<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/10\/Daily-Editorial-Analysis-31-10-2026.pdf\"><strong>Download PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 31 October, 2026<\/p>\n<p> India&#8217;s position at 38th in Global Innovation Index (GII), 2026 has renewed debate over inadequate R&#038;D expenditure, weak private-sector participation and the need for manufacturing-led innovation. <\/p>\n","protected":false},"author":4,"featured_media":87782,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-87780","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/10\/global-innovation-index.webp","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87780","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=87780"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87780\/revisions"}],"predecessor-version":[{"id":87787,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87780\/revisions\/87787"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/87782"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=87780"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=87780"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=87780"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}