Editorial Analysis – India’s R&D estimates are an incomplete picture

Source – TH

• Prelims: GDP, GERD, Department of Science and Technology (DST), new scientific methods, CSIR etc
• Mains GS Paper III: Important aspects of technology, Achievements of Indians in science & technology; indigenization of technology and developing new technology etc

Key Points

The ratio of India’s research and development (R&D) expenditure to GDP, which is 0.7%, is considerably lower than that of major economies, and falls well below the global average of 1.8%.

About the Issue

Research and Development

• Developing new products and solutions for diseases through R&D is critical for promoting economic growth and enhancing social welfare.
• Nurturing a scientific temperament among the general population is crucial for countering superstitions and misinformation.
• Embracing innovation and technological advancements is vital for tackling climate change and fostering sustainable development.
• Combating national security threats such as cyber warfare is a necessity.
• The National Science and Technology Management Information System (NSTMIS), under the DST, is responsible for compiling GERD statistics in India.

Low expenditure on R&D

• The primary factor is the inadequate corporate sector investment in R&D.
  • The corporate sector contributes approximately two-thirds of the gross domestic expenditure on R&D (GERD) in major economies.
  • In India, their share is 37%.

Data

• According to the National Science Foundation (NSF) report on foreign R&D by U.S.-based multinational corporations (MNCs), these corporations spent $5.9 billion on R&D in India in 2018, which increased to $9.8 billion in the following year.
• The Department of Science and Technology (DST) 2020 report on Research and Development Statistics estimates that foreign MNCs spent ₹60.9 billion on R&D in 2017-18.
  • This amounts to approximately 10% of what U.S. companies have reported spending on R&D in India.

Official R&D estimates are significantly inadequate due to key factors

• The current method for identifying R&D-performing firms fails to capture all such firms.
• The National Science and Technology Management Information System (NSTIMS) relies on the Department of Scientific and Industrial Research (DSIR) list of recognized R&D units and the Prowess database of the Centre for Monitoring Indian Economy Pvt. Ltd. to identify R&D-performing firms.
• The DSIR list may not include many actual R&D performers due to:
  • Firms finding government incentives unattractive
  • Firms being hesitant to share sensitive information
  • R&D firms in services such as software and R&D services finding it challenging to distinguish R&D infrastructure from their regular business.
• The NSTMIS survey is the primary source of R&D statistics in India.
  • For firms that do not respond to the survey, data is collected from secondary sources such as annual reports and Prowess.
  • This method is dependent on firms disclosing their R&D expenditure.

Multiple Studies

A study conducted by the Institute for Studies in Industrial Development revealed the following findings:

• The study focused on 298 firms that received foreign investment for R&D purposes between 2004 and 2016.
• Only 11% of these firms were registered with the Department of Scientific and Industrial Research (DSIR).
• The Prowess database, which is used by the National Science and Technology Management Information System (NSTMIS), covers only 5% of the currently active registered enterprises in India.
• Some of the leading Indian enterprises in new technology areas and foreign R&D centers are not covered by the DSIR directory of recognized R&D units and Prowess. For instance:
  • SigTuple Technologies, a leading start-up in India focusing on artificial intelligence-based HealthTech, has filed 19 patents as of 2021 but is unlisted in both databases.
  • Documents submitted to the Ministry of Corporate Affairs (MCA) by some R&D-oriented firms show that there are firms that do not report any spending on R&D despite their declarations suggesting that they are engaged in technology development, adoption, and adaptation activities.
  • Some of the firms that do not report spending on R&D have patents granted in India or have personnel mentioned as innovators in patents granted by the U.S. Patent and Trademark Office.

Way Forward

• To accurately represent India’s R&D landscape, both short-term and medium-term measures are needed.
  • In the short term, NSTMIS can incorporate patents granted data from India and the U.S. to identify R&D performing companies.
• R&D statistics should not be solely based on survey responses.
  • Mandatory disclosures made by companies to the MCA can be used to estimate annual R&D spending.
• To ensure proper reporting and compliance, technology like revamped income-tax return forms with interconnected sections can be implemented.
• Disclosing R&D spending data to regulatory agencies should be a vital aspect of the environmental, social, and governance (ESG) ranking of companies.

Mains PYQ

Why is there so much activity in the field of biotechnology in our country? How has this activity benefitted the field of biopharma?(UPSC 2018) (200 WORDS, 10 MARKS)

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