Answer:

India’s expenditure on R&D remains relatively low, hovering around 0.65% of its GDP, lagging behind countries like South Korea (4.8%) and China (2.4%). Despite the government’s growing focus on sectors like defence and space, private sector involvement in research remains minimal. This gap hampers India’s efforts to achieve technological self-reliance and innovation-led growth, critical for global competitiveness.

India’s Low R&D Expenditure Compared to South Korea:

• Global Comparison: India’s 0.65% of GDP spent on R&D is dwarfed by South Korea’s 4.8%, underscoring the disparity in prioritising innovation. South Korea’s heavy investment in semiconductors and electronics has resulted in global dominance in these fields.
  For example: Samsung invests heavily in R&D, contributing over $21 billion annually to cutting-edge technology development.
• Sectoral Allocation: India’s R&D funding is skewed towards government-led sectors like defence, while South Korea’s private sector accounts for over 70% of total R&D spending, fostering innovation in industries like automobiles and telecom.
• Private Sector Involvement: The Indian private sector’s share in R&D is only around 40%, much lower than in countries like South Korea, where businesses lead innovation efforts.
  For example: companies like Hyundai and LG Electronics in South Korea contribute significantly to R&D, focusing on electric vehicles and home appliances, respectively.
• Innovation Output: South Korea ranks highly in patent filings and innovation indices, with a robust pipeline of commercialised technologies. India’s low R&D spending reflects in fewer patents and innovations, limiting global market influence.
• Economic Strategy: South Korea’s economy is technology-driven, with R&D being central to its growth strategy. India’s R&D investment remains insufficient to support similar technological advancements, limiting its global competitive edge.

Reasons Behind Low R&D Spending in India:

• Lack of Private Sector Incentives: R&D tax incentives are minimal, particularly for MSMEs, discouraging innovation. South Korea offers better tax reliefs, making R&D a financially viable option for private companies.
  For example: India’s 100% tax deduction for R&D investments is often inaccessible to smaller companies, reducing their R&D participation.
• Intellectual Property Issues: Complex patent laws and IP protection challenges discourage investment in innovation. South Korea’s simpler patent regime fosters more private sector engagement.
• Limited Exposure to Global Competition: Indian industries, protected by high tariffs, face less competitive pressure, reducing the urgency for R&D investments, unlike South Korea’s global market exposure.
  For instance: India’s automobile sector, shielded by tariffs, lacks the innovation seen in South Korea, which must compete with global automakers.
• Administrative Barriers: Bureaucratic hurdles in accessing R&D funds discourage companies from investing. South Korea’s streamlined approval systems for R&D grants incentivize innovation.
  For instance: India’s complex procedures for availing government grants deter small enterprises from engaging in R&D activities.
• Low Global Market Presence: Indian firms, particularly in manufacturing, have limited global market penetration, diminishing the need for R&D-driven innovation. South Korea’s success in global markets incentivizes constant innovation.
  For instance: Samsung and Hyundai invest heavily in R&D to maintain global leadership, while Indian firms are less prominent internationally.

Way Ahead:

• Increase Private Sector Role: Government should provide enhanced tax incentives and grants to the private sector, particularly for MSMEs, to encourage higher R&D investment.
  For example: South Korea offers R&D tax credits up to 30% for private firms, significantly boosting innovation.
• Strengthen Intellectual Property Regime: Simplifying patent filing and improving IP protection would encourage more private investment in research and development.
  For instance: India could follow South Korea’s streamlined patent system, which encourages quicker commercialization of innovations.
• Promote Global Competitiveness: Exposing Indian firms to global markets through reduced tariffs would drive innovation and R&D investment.
  For instance: Sectors like IT and telecom should face global competition, pushing firms to innovate like Samsung and LG.
• Enhance Collaborative Research: Establishing more public-private partnerships and fostering collaboration between academic institutions and industries would help bridge the R&D gap.
• Focus on Emerging Technologies: Prioritise R&D investments in AI, blockchain, and biotechnology to ensure India’s future relevance in global innovation.

For India to achieve its aspirations of becoming a global innovation leader, the focus must shift toward increasing private sector R&D investments and addressing structural barriers. Encouraging global competition, simplifying patent processes, and furthering collaborative research will pave the way for sustained growth, ensuring India can compete in high-tech industries and lead in future technological innovations.

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