Date: 28/02/2023

Relevance: GS-3: Science and Technology- developments and their applications and effects in everyday life.

Key Phrases: disincentivises investment in R&D, GERD (Gross Domestic Spending On R&D), Institute for Competitiveness,

Context:

• In India, the government undertakes 60 per cent of expenditure on R&D, unlike other nations where private enterprise takes the lead.
• Despite efforts to boost R&D, the country’s spending on R&D has remained stagnant at around 0.7 per cent of GDP.

Why Invest in R&D?

• While innovation is greatly valued, there is a multitude of benefits of investing in R&D that go beyond innovation for innovation’s sake.
• Firstly, investing in research and development ensures high market participation by the company.
• Market participation refers to the ability of the company to engage with its customer base and hook their interest by offering unique products. Such research and development may even lead to the creation of new markets.
• The creation of innovative products not only adds new revenue streams but also increases brand visibility.
• The costs associated with undertaking R&D activities can be surmounted by credibly seeking public sector grants for innovation and development.
• This also opens up avenues for collaboration and public-private partnerships.
• Additionally, investing in R&D can result in tax relief in certain geographies including India.
• The Government of India has provided an impetus to investments in R&D by way of various tax incentives.
• These incentives are available with respect to revenue and capital expenditures incurred by entities for carrying out R&D activities in relation to their businesses, including their contributions to various institutions for carrying out scientific research.

Types of Research and Development:

1. Basic research:
   • It refers to experimental or theoretical work undertaken primarily to acquire new knowledge about the underlying foundation of varied phenomena and observable facts, without any particular application or use in view.
2. Applied research:
   • Applied research is largely the same as basic research. However, it is undertaken with a specific practical aim or objective in mind.
   • Applied research is an approach used in diverse fields ranging from business to medicine to education and beyond.
3. Development research:
   • While the aforementioned two forms of research and development are focused on the acquisition of new knowledge, development research takes into consideration existing knowledge and employs it towards producing new materials, products or devices, installing new processes, systems and services, or improving existing ones substantially.
   • It is critical to differentiate between development research and engineering at this juncture.
   • While development research results in the design and actualisation of prototypes and processes, engineering makes use of the end product(s) to produce commercial outputs.

What are the key Issues?

• Private R&D:
  • Historically, India’s patent system had a reputation for being weak and unreliable when it comes to safeguarding commercial innovations.
  • This has created a sense of unease among firms, as they fear that their intellectual property may not be adequately protected, leaving their potential profits vulnerable.
  • The main obstacle for firms when it comes to innovation is the risk of imitation by local competitors, which further disincentivises investment in R&D.
  • One of the other reasons that private firms invest more heavily in R&D than the government in the US and China is the calibre of talent that their higher education institutions attract.
  • Both nations recognise the crucial role that these institutions play in driving innovation.
• Government Machinery:
  • Procuring laboratory equipment can be a nightmare for researchers
  • If fortune does not favour them, they must embark on a labyrinthine journey of paperwork through a Global Tender Enquiry (GTE), that leads them through the research institute, to the line ministry, and finally to the secretary of that ministry for consent.
  • The game has been made less restrictive than before, but the delays are still crushing.

Way Forward:

• Innovation in India is akin to a resource allocation problem. The complexity of managing the allocation of resources is a formidable challenge in the journey of fostering innovation.
• For starters, the public expenditure on R&D activities, especially in (Higher Education Institutions)HEIs, should be increased to at least 1 percent. Even this is well below the global average.

Conclusion:

• Just as a ship that overlooks to chart new waters will become stranded, so will a nation that fails to invest in research and development find itself stuck in the doldrums of economic stagnation.
• Innovation and technical progress are prerequisites for economic growth.
• Thus, for an economy to grow, there is a constant need to innovate.

Source: The Hindu BL

Mains Question:

Q. Why there is a need to invest in R&D for a country? Discuss about the types of Research and Development. (250 words).