Govt must go beyond RDI, fund bluesky research at the university level

The Research Development and Innovation (RDI) Scheme, approved by the Union Cabinet this week, is an acknowledgement that policymakers must find ways to spark innovation and support it with funding. However, while the scheme is a step in the right direction, a lot will need to be done and, given the way the scheme is designed, it may not address some key concerns that hinder India’s research & development (R&D). India spends less than 1 per cent of its gross domestic product (GDP) on R&D, while for China and South Korea, for example, it is over 2.5 per cent. Thus, while India has an enormous pool of tech graduates, many of them migrate abroad or find employment in roles where they don’t use their hard-earned skills. India ranks 39th on the global innovation index, which is way below its potential.

 

The scheme envisages long-term financing at low interest rates for R&D through a two-tier mechanism to spur private-sector investment in RDI. The top tier, Anusandhan National Research Foundation (ANRF), will handle a corpus of ₹1 trillion through a special-purpose fund, which it will pass on at zero or low interest to a second tier of fund managers. The second tier will disburse funds to interesting projects in the private sector. The idea is to provide growth and risk capital to sunrise and strategic sectors to facilitate innovation. The scheme is aimed at encouraging the private sector to scale up RDI in sunrise domains and support the acquisition of critical technologies. In itself, this would be useful. Comparisons would, however, arise, for example, with two government institutions that have famously funded research successfully. One is the United States Defense Advanced Research Projects Agency, or Darpa, and the other is Japan’s erstwhile Ministry of International Trade and Industry (Miti).

 

Miti performed a role similar to that envisaged for the RDI scheme for five decades, funnelling funds into projects that enabled Japan’s private sector to develop its formidable techno-industrial base. But Japan already had an educational system with thriving research institutions and universities that did “bluesky” fundamental research across many disciplines. Miti enabled that knowledge and those skill sets to be repurposed and channelled into industrial applications with commercial value. Darpa funded research into all kinds of bluesky and “moonshot” projects across America’s universities and research labs. While it was focused on defence applications, it famously enabled the creation of the internet and drove R&D into robotics, medical research, and solar power, among other things, by funding such projects in universities. Miti looked for return on investment (RoI), whereas Darpa funded research without RoI as top priority.

 

By comparison, India lacks both private corporate funding for R&D, as well as funding for bluesky R&D at university level. One reason for the brain drain from India has been the lack of opportunities in technical fields, owing to a variety of reasons, including a lack of research grants and delayed release of funds even where grants are sanctioned. The RDI scheme may address some of the concerns about private-sector R&D, though it will be critically important to support the right sort of projects. It is worth noting that great innovation often comes out of small startups rather than large corporations. Predictably, the success of the scheme will depend on the kind of organisation and projects that are funded. In this regard, it is important to focus on small, agile firms engaged in technology research. Large corporations usually have the financial wherewithal to invest. India also needs to find ways to channel funding efficiently into fundamental bluesky research in universities and other research organisations.