Recently, the Department of Science and Technology, Government of India, published its report titled Research & Development Statistics at a Glance 2025-26. The report stated that India’s gross expenditure on research and development (GERD) has more than tripled over a decade, rising from ₹79,355.89 crore in 2013-14 to ₹244,767.81 crore in 2023-24. India’s GERD reached an all-time high in 2023-24, touching 0.84% of the GDP, and the report predicted a continuation in its upward trajectory. While the milestone does highlight India’s progress in funding its science and tech innovation ecosystem, it needs a closer critical reflection to better grasp India’s digital innovation footprints and broader strides in science and technology R&D.
India’s digital success is often measured by record-breaking payment volumes, and absolute stats are showcased as signs of technological leadership. However, the devil lies in the details. The report cited above also mentioned that GERD for 2023-24 was “mainly driven by the private sector industry (45.2%), central sector institutions/labs (30.9%), higher education institutions (12.6%), and public sector industry (4.1%)”, while the contributions of institutions under state government and scientific and industrial research organisations (SIROs) remained on the margins at 4.0% and 3.2% respectively. The limited R&D capacity of institutions at the federal level, and a consequent top-down percolation of scientific knowledge, is just one of the apparent problems towards generating avenues for decentralisation of R&D and generation-cum-application of localised knowledge.
Diving into the report further reveals that DRDO alone accounted for a major chunk (32.7%) of India’s GERD by the central sector institutions for 2023-24, and has been consistently the largest contributor over the years. While defence spending is crucial to India’s superpower ambitions, there needs to be an equal push towards strategic investment in innovation in the other sectors. For instance, MeitY and the Department of Science & Technology barely account for 2.7% and 5% of the expenditure by the central sector for 2023-24. Similarly, industrial R&D for the private sector was absolutely dominated by transportation and drugs and pharmaceuticals, with a share of 32.6% and 21.4% respectively, while information technology (7.9%) and electricals & electronics (5.9%) remained relatively miniscule in their shares. The most worrying aspect of GERD trends is the rapid increase in percentage share of MNCs in total business R&D in India, going up from 49.9% in 2020-21 to 71.3% in 2023-24, with the composition of MNCs including 252 private sector Indian MNCs, 124 private sector foreign MNCs and 14 public sector Indian MNCs. In essence, tech R&D is either being outsourced to India for foreign consumption, or exported to foreign markets without ushering in a parallel transformation within the Indian society.
{{/usCountry}}Diving into the report further reveals that DRDO alone accounted for a major chunk (32.7%) of India’s GERD by the central sector institutions for 2023-24, and has been consistently the largest contributor over the years. While defence spending is crucial to India’s superpower ambitions, there needs to be an equal push towards strategic investment in innovation in the other sectors. For instance, MeitY and the Department of Science & Technology barely account for 2.7% and 5% of the expenditure by the central sector for 2023-24. Similarly, industrial R&D for the private sector was absolutely dominated by transportation and drugs and pharmaceuticals, with a share of 32.6% and 21.4% respectively, while information technology (7.9%) and electricals & electronics (5.9%) remained relatively miniscule in their shares. The most worrying aspect of GERD trends is the rapid increase in percentage share of MNCs in total business R&D in India, going up from 49.9% in 2020-21 to 71.3% in 2023-24, with the composition of MNCs including 252 private sector Indian MNCs, 124 private sector foreign MNCs and 14 public sector Indian MNCs. In essence, tech R&D is either being outsourced to India for foreign consumption, or exported to foreign markets without ushering in a parallel transformation within the Indian society.
{{/usCountry}}The true test of India’s technological progress lies elsewhere: Whether innovation can improve productivity in a village, expand opportunity in a small town and strengthen public services where they matter most. This is not simply an argument for inclusion. It is an economic argument.
Zoho founder Sridhar Vembu recently asked on X: Why can a Swiss school teacher buy an iPhone with days of income while her Indian counterpart must work for months? His thesis of rural development through research and development holds that deep technological capability determines the terms on which a society trades with the world, and therefore what it can afford to pay its teachers, nurses and farmers. The GERD numbers make his insight a prescription: raise research spending, spread it beyond a few agencies and multinational balance sheets, and deploy it where livelihoods are made.
Higher education contributes just 12.6% of India’s GERD; its greatest untapped resource. Universities are the natural instrument of decentralised research: spread across districts, embedded in local languages and economies, generating and applying localised knowledge. Private universities, with their autonomy and agility, are the best bet for fast-tracking innovation, provided government and industry fund them as research partners through public grants and problem-driven industry laboratories. Agricultural universities can co-create technologies with farmers, engineering colleges can build multilingual, voice-first applications, and medical colleges can pilot telehealth with district hospitals.
India’s GERD milestone deserves celebration; its composition demands correction. Route research funding through universities into villages and small towns, and innovation will reach the farmer, student and entrepreneur, serving both India and Bharat.
(The views expressed are personal)
This article is authored by Shobhit Mathur, VC and co-founder and Yashowardhan Tiwari, VC’s office, Rishihood University.