India’s innovation gap can be seen in the financial numbers of Indian companies

Technological innovation in all quarters is critical for accelerated economic growth. However, India’s research and development (R&D) debate often focuses on public spending: how much the government allocates, which missions are launched and what headline targets are announced. The data, however, suggests that India’s innovation shortfall is fundamentally an industry story.

What distinguishes India from global technology leaders is not an absence of policy intent, but the reluctance of corporates to invest meaningfully in research. The recent CTIER Handbook on Technology and Innovation in India 2025 brings out a few critical aspects of India’s innovation landscape. First, India’s R&D expenditure remains structurally low.

In 2023, it stood at 0.6% of GDP, the lowest among major innovation economies, and has been stuck in a narrow 0.6–0.9% band for more than three decades. Over the same period, peer economies have steadily intensified their commitment by gradually scaling up R&D investments. Israel and South Korea consistently spend over 4% of GDP on R&D, the US exceeds 3.5% and China has raised its R&D intensity to around 2.6%, reflecting sustained policy and industry commitment to tech leadership.Second, India’s R&D ecosystem is heavily dependent on the government.

In 2023, the public sector accounted for 55% of total R&D expenditure, while industry contributed just 36% and higher education 9%. This contrasts sharply with global patterns. Industry finances roughly 75–80% of R&D in the US and China, over 70% in South Korea and Germany, and close to 80% in Israel, underscoring the centrality of corporates in advanced innovation.Third, recent trends are particularly concerning.