No escaping public funding in R&D : The Tribune India

Dinesh C Sharma
Science Commentator

The pandemic has brought the world’s attention not only to the threat of new and emerging infectious agents, but also to the critical role research and development (R&D) could play in addressing the challenge. Indian vaccine companies, working with public-funded research institutions, were at the forefront of this fight against the novel coronavirus. The Indian vaccines developed, manufactured and disseminated during Covid-19 are a result of sustained investments made over decades in R&D, high-tech manufacturing and favourable public policies. The rapid uptake of digital technologies in India is also a by-product of public investments made in top-quality engineering education, incentives given to software and services companies for long, and the new impetus on promoting startups.

The state’s role in funding R&D and incentivising tech-based industries continued to be pivotal even after the era of liberalisation began in 1991. The reality is that while the actual expenditure on R&D has gone up in the past decade, R&D expenditure as a percentage of GDP has been stagnating at below 1 per cent for long

India’s science, technology and innovation (STI) landscape consists of national laboratories, research councils (agriculture, medical), public and private universities, higher education institutions engaged in research like IITs, specialised agencies (space, atomic energy, defence R&D), public sector units engaged in high-tech production, private R&D-led companies and other non-governmental organisations. The investments made in the early decades after Independence and subsequent developments have helped in creating and nurturing this infrastructure.

The Green Revolution in the 1960s was driven by field research in agricultural universities and innovative ways of disseminating high-yielding varieties. In the 1970s, when the patent law was changed to abolish product patents, CSIR laboratories quickly developed new processes for lifesaving drugs, spawning indigenous generic drugs. These capabilities, in the next two decades, made India the pharmacy of the world. The digital telecom switch developed by the specially created Centre for Development of Telematics (C-DOT) in the mid-1980s broke the MNC stranglehold and ushered in a telecom revolution. It was a public-funded initiative, but the technology was made available for free to the private sector. The software revolution of the 1990s also owes its success to a public policy initiative — the Software Technology Parks of India scheme, which provided shared data links to entrepreneurial firms for exports. On top of it, the tax incentives helped the sector grow exponentially.

The state’s role in funding R&D and incentivising technology-based industries continued to be pivotal even after the era of liberalisation began in 1991. Has it changed since then? Is public investment in R&D going down? Some recent policy changes such as opening up the space sector to private players and allowing the use of CSR (corporate social responsibility) funds for R&D have fuelled speculation that government support for research is waning. The reality is that while the actual expenditure on R&D in India has gone up in the past decade, R&D expenditure as a percentage of GDP — a globally accepted yardstick to measure competitiveness in STI — has been stagnating at below 1 per cent for long.

Compared to India’s 0.7 per cent of GDP spent on R&D, China spends 2.14, Germany 3.13, Japan 3.28, Israel 4.94, America 2.83 and so on. Brazil and South Africa also spend more than India. Another parameter is Gross Expenditure on R&D (GERD) per capita. India’s GERD per capita is $43, compared to China’s $325, Israel’s $2,108, America’s $1,777, Germany’s $1,700 and Malaysia’s $293, according to data compiled by the Unesco Institute of Statistics. Of 0.7 per cent of the GDP that India spends on research, over 63 per cent comes from the government. Another indicator where India fares badly is the number of researchers per million of the population. For India, this figure is 255, compared to 8,342 in Israel, 7,498 in Korea, 5,304 in Japan and 7,597 in Sweden. In absolute numbers, India has 3.42 lakh researchers compared to 17.4 lakh in China and 13.7 lakh in the US.

Successive governments have recognised the need for increased R&D funding, setting the goal of at least doubling it from 0.7 per cent of GDP. The draft of the new Science, Technology and Innovation Policy reiterates this goal and sets the timeline for doing so in the next five years.

Besides Central funding, the policy draft suggests that states should earmark a percentage of the state allocation for STI-related activities under a separate budget head, and should work in tandem with Central agencies to boost resource mobilisation and budget sharing. Private companies, it says, should be encouraged to ‘contribute and collaborate with knowledge institutions’ to pursue market-relevant research. Industry clusters could engage in collaborative R&D with a special focus on certain high-priority areas. In addition, CSR funds and voluntary financing by big corporates will have to be sought. So, the thrust in R&D continues to be public funding, with efforts to supplement it with that from private sources.

If India has to reach the stated policy goal of achieving technological self-reliance, there is no escaping enhancing public funding in R&D, especially basic research. The pandemic has demonstrated the criticality of technological self-reliance and industrial muscle in key areas. The national STI system responded to the crisis and delivered the goods. The vaccine manufacturing capabilities in the private sector, built over the decades with support from public institutions and scientific infrastructure in the public sector, helped India develop and deliver Covid-19 vaccines in time. Policymakers also realised that it was a mistake to shut down the public sector vaccine companies in the post-liberalisation era. Soumya Swaminathan, outgoing Chief Scientist of WHO, has warned against over-dependence on biomedical R&D in the private sector as big pharma companies are driven by returns and not health priorities. The market-driven R&D will always look for the highest financial returns with the lowest risk. That’s why just 0.5 per cent of the 56,000 new biomedical products in the R&D pipeline globally are for neglected tropical diseases which affect two billion people globally, Swaminathan has pointed out.

Another area where state-led R&D holds the key relates to strategic materials and products like semiconductor chips. During the pandemic, the global supply chains of chips were disrupted as production was affected in Taiwan where large foundries are located. This had a chain effect in a range of industries, from smartphones and laptops to cars and washing machines. This made all major consumers draft plans to minimise dependence on Taiwan. Governments in America, Europe and Korea are pumping hundreds of billions of dollars into developing local capability.

The Indian government, too, has decided to give a massive subsidy of Rs 76,000 crore for semiconductor manufacturing and has decided to revive the Semiconductor Laboratory (SCL) in Mohali. Early funding in strategic areas like space and nuclear energy is helping India reap the benefits today. In semiconductor manufacturing, India began early with SCL but crucial time was lost due to the fire incident in 1989 and then there were delays in rebuilding. At one point, the government wanted to close it down. It is only after the chips shortage that new plans have been announced to strengthen the facility. The same was the story with C-DOT, which delivered the rural digital switch in the late 1980s, but telecom R&D was neglected in the 1990s. The instances of SCL and C-DOT show that public funding needs to be sustained for technologies to mature and adapt to the changing needs and market conditions.

Steps should also be taken to enhance research output, quality of research and its relevance to society and industry, besides encouraging the private sector to increase its share in research and build partnerships with research labs as well as academia. The startup ecosystem in the private sector will also benefit from public investments in R&D. The startups in the space sector are a classic example of this. They are not only having access to the infrastructure of the national space agency but also benefit from the technological manpower it has developed over decades. As new and disruptive technologies emerge, the national STI system needs to be strengthened with more funding, collaboration and a clear pathway. 

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