This blog post is a modified and shortened version of an essay submitted for the London Centre’s options course Science, Governance and the Public, tutored by Dr. Jon Agar (UCL STS). The original essay was titled “A Critical Analysis of India’s Science, Technology and Innovation Policy 2013”, and was submitted on 12 June 2013.
In January 2013, the Government of India announced the Science, Technology and Innovation (STI) Policy, with a view to “drive both investment in science and investment of science-led technology and innovation in select areas of socio-economic importance.” This policy is the fourth national policy in science and technology since the Scientific Policy Resolution (SPR) of 1958, the Technology Policy Statement (TPS) of 1983, and the Science and Technology (S&T) Policy of 2003. While the previous policies focused on promoting science and scientific research, emphasised the need for technological self-reliance, and aimed to promote investment in R&D, respectively, the 2013 STI policy aims to embrace and promote science and technology-led innovation as a means for social and economic development.
The chief aim of the Science, Technology and Innovation Policy 2013 is to increase India’s GERD from the present under 1% of GDP to 2% of GDP in the next five years. The Indian government plans to achieve this target by raising private sector investments in research and development to levels almost equal to that of public sector investment. The STI policy states:
Increasing Gross Expenditure in Research and Development (GERD) to 2% of the GDP has been a national goal for some time. Achieving this in the next five years is realisable if the private sector raises its R&D investment to at least match the public sector R&D investment from the current ratio of around 1:3.
The policy also briefly mentions the government’s plans of attracting private sector investment in R&D. The government’s chief focus is on establishing R&D facilities through a Public-Private Partnership (PPP) initiative. The government also intends to allow private sector organisations equal access to public funds as public sector institutions, and develop systems to help science-led entrepreneurship.
On close comparison, it can be seen that similar claims were outlined in the 2003 S&T policy, announced by the Government of India in January 2003. The policy proposed an increase in India’s GERD from 0.8% of GDP in 2003 to 2% of GDP by 2007, or the end of the Tenth Five Year Plan (2002 – 2007). The government also indicated measures to help increase R&D investments by the private sector. The policy stated:
There has to be increased investments by industry in R&D in its own interest to achieve global competitiveness to be efficient and relevant. Efforts by industry to carry out R&D, either in-house or through outsourcing, will be supported by fiscal and other measures. To increase their investments in R&D, innovative mechanisms will be evolved.
The 2003 policy, however, failed to achieve its main objective. According to UNESCO World Science Report 2010, India’s overall GERD stood at only around 0.88% of GDP at the end of the Tenth Five Year Plan in 2007, against the government’s expectations of 2% of GDP.
The 2013 STI policy does not mention any of the reasons as to why the 2003 S&T policy failed to meet one of its primary objectives, especially when the 2013 policy reiterates the same objective. In such cases, an appraisal of the reasons for underperformance of past policies becomes crucial to proper framing of the present policy and opens avenues for discussions on why targets could/can not be achieved, what the structural impediments were/are, and what were/are the challenges and implementation issues.
Primarily, the 2003 policy did not mention any specific measures that the government intended to take in order to improve private sector involvement in R&D funding. The policy concentrated solely on increasing private sector investment in R&D without due consideration to the institutional, legal and tax bottlenecks facing private sector organisations. The 2010 OECD report, India: Sustaining High and Inclusive Growth, expresses concerns over the various hindrances that private sector organisations face in India:
India’s framework conditions for entrepreneurship remain weak. Trade and FDI restrictions, along with administrative red tape and restrictive product market regulations, hinder investment and productivity. The financial sector is also insufficiently developed to meet capital needs in a fast-growing economy, let alone the need for financing business innovation.
While the government of India does provide the private sector with tax deductions for in-house R&D expenditures, payments to research institutions, and the expenses of employees’ salaries and materials used in R&D, there are, however, several hurdles that private sector organisations must overcome before obtaining any of these benefits. First, the tax deduction is mainly limited to organisations involved in biotechnology or manufacturing and producing goods. In addition, only organisations that perform R&D activities and incur costs in India are eligible for these benefits. As a result, many Indian private sector organisations that intend to fund, perform or collaborate with R&D activities abroad, and bring the results of these R&D activities back to India, have almost negligible government support.
Another aspect in which the 2003 S&T policy failed is the recognition of the growing private sector investment in R&D in India. Since the liberalisation of the Indian economy in 1991, the average GERD/GDP ratio has been constant at 0.78%, within which the contributions of the private sector in R&D have increased from 19% of GERD in 2002 – 2003 to almost a third of GERD in 2007. This upward trend is generally considered “necessary for translating R&D outputs into commercial outcomes.” According to the UNESCO World Science Report 2010, the very minute but important growth of the GERD/GDP ratio from 0.8% in 2003 to 0.88% in 2007 can be attributed only to the contributions of the private sector, especially to the investments of fast-growing sectors such as pharmaceuticals and automobile. On the other hand, public sector contribution to this percentage growth can be considered negligible because although the government contributes almost two-thirds of the total investments in research and development, government-funded research is rarely directly used for civilian benefits. Public sector investment is concentrated mainly on defence, space and nuclear physics.
Although vacuous in the specifics, the 2013 STI policy does acknowledge the growing rates of industrial R&D and the problems in institutional structures in science in India, and highlights a number of areas in innovation in which the government plays a crucial role. Perhaps most importantly, the 2013 policy document acknowledges the role of the government in creating an environment conducive “for enhancing private sector investment in R&D.” In later pages, the document also briefly highlights the government’s plans to adopt a flexible approach to investment, which would allow modifications in the Five Year Plans in accordance with changes in the S&T scenario. However, such plans of the future do not seem adequate unless the government acknowledges the failures of the previous policy and, in addition to looking to increase R&D investments, also includes detailed plans of how the S&T system would be reformed in order to utilise these funds meaningfully. Gautam R. Desiraju, a professor of chemistry in the Indian Institute of Science, Bangalore, wrote in 2012:
Although there was, curiously, no increased allocation to science in this year’s Indian budget, there is hope that, as the prime minister has declared, things would improve if government support were increased to 2% of the gross domestic product. But it is a haphazard plan, with no hint of new strategies. The assumption is that the answer to our problems lies simply in more money.
Despite containing progressive plans and initiatives, the STI policy seems ambitious and ambiguous. The STI policy oversimplifies the complex structures of public-private partnerships and investments in R&D in India, and also does not take into account the successes and failures of previous policies, especially the S&T policy of 2003. An appraisal of previous policies is imperative to understanding their levels of performance and identifying the causes of underperformance. A lack of such appraisal in the STI policy means that the policy fails to recognise the structural impediments, institutional bottlenecks and other challenges that affected the implementation of the previous policy, and which could also affect the implementation of the aims of the present policy.
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