From Frugal to Frontier: The Next Stage of India’s Innovation Journey
India’s climb up the Global Innovation Index is notable, but sustaining it will depend on deeper R&D, broader finance, and inclusive diffusion beyond metros.
View as PDF
Chitra Saruparia, Center for Economics, Law and Public Policy, National Law University, Jodhpur
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Institutions: Ministry of Health and Family Welfare | Ministry of Women and Child Development | Ministry of Electronics and Information Technology
The World Intellectual Property Organization (WIPO)’s Global Innovation Index (GII) 2025 ranks India 38th among 139 economies, ahead of Vietnam and the Philippines. This confirms its leading role in South Asia and the lower-middle-income group. Rankings, however, are milestones, not strategies.
Innovation amid Global Headwinds
The world’s R&D engine is sputtering. Global spending expanded by just 2.3 percent in 2025 – the slowest in more than a decade. Venture capital showed a similar pattern: deal values climbed 7.7 percent, but the number of transactions fell 4 percent, evidence of consolidation around fewer, larger bets.
Against this slowdown, India stands out. ICT services exports, unicorns (start-ups valued above $1bn) and intangible assets such as brands, patents and proprietary data have helped it defy the trend. Sustaining India’s innovation momentum will require more than global visibility: it must evolve into deeper domestic capacity. That means stronger levers at home – from R&D tax credits and co-investment funds to tighter university–industry links – along with more inclusive finance and innovation that reaches beyond metropolitan hubs.
Global Linkages and Alliances
Positioning in global supply chains will be as important as domestic levers. India’s chance lies in semiconductors, pharmaceuticals and climate technologies, where strategic alliances are emerging. Partnerships in clean energy research and semiconductor consortia could shift India from a “catch-up” role to that of co-creator. But unless access to intellectual property is widened and trade rules are more open, gains will be capped. In a world where knowledge flows are increasingly politicised, India’s ability to secure access will be as decisive as its domestic reforms.
India’s Cluster Strength, Bharat’s Innovation Gap
India now has four cities – Bengaluru, Delhi, Mumbai and Chennai – among the world’s top 100 innovation clusters, placing them alongside hubs such as Silicon Valley and Shenzhen. These hubs thrive by clustering universities, entrepreneurs and investors.
But the comparison highlights how far India still has to go. China alone has more than 20 clusters on the global list, while emerging ASEAN economies are rapidly expanding their ecosystems. Unless smaller Indian cities and rural clusters are drawn in, the country risks a two-speed trajectory: global hubs surging ahead while vast regions remain tied to low productivity. Bridging the gap will require state-level innovation funds, incubators linked to regional universities, and investment in digital and transport networks to connect smaller clusters to markets.
Beyond Frugal Innovation
India’s standout performance also reflects efficiency: producing more innovation than expected for its income level. This “doing more with less” reputation is exemplified by low-cost vaccines and digital platforms such as the Unified Payments Interface (UPI).
Efficiency alone, however, will not secure leadership in frontier fields such as artificial intelligence (AI), green technologies and advanced manufacturing – the sectors that will define competitiveness in the decades ahead.
India’s R&D spending, still just 0.7 percent of GDP, lags far behind South Korea and Israel, which invest above 4 percent. Closing the gap will mean reprioritising budgets towards science and technology, mobilising sovereign and corporate social responsibility funds for high-risk projects, forging public–private partnerships in AI and clean energy, and pressing industry to commit more of its own capital – as Korea once did in semiconductors.
More money must be matched by better governance. India files more patents and registers more start-ups, but quality lags. Without stronger evaluation – tracking jobs, productivity and sustainability – resources risk being wasted. Transparent metrics and independent reviews could ensure scarce funds go to projects with lasting impact.
Finance and Institutional Depth
Innovation also needs the foundations of capital and rules. India’s venture ecosystem is still concentrated in metros and late-stage deals. Without early-stage capital beyond Bengaluru and Delhi, promising firms will stall. State-backed funds, tax incentives for investors in smaller hubs and blended finance pools that share risk between government and markets could help fill the gap.
Institutions matter as much as money. Regulatory sandboxes – controlled spaces to test new technologies – have shown promise in fintech and could be extended to healthtech and clean energy. Such mechanisms allow experimentation without destabilising markets, giving India scope to adopt new ideas faster. Together, deeper finance and agile regulation can provide not just resources but the scaffolding for start-ups to scale.
Innovation for People and Places
Innovation that fails to reach farmers, students and small firms risks becoming concentrated rather than dispersed. Farmers need climate-resilient seeds and precision tools; students require apprenticeships in frontier industries; small firms need affordable credit and digital platforms.
Women remain under-represented in STEM, and regional disparities leave large sections of the workforce excluded.
Closing these gaps would not only widen opportunity but also enlarge the pool of ideas. Agricultural research bodies could partner with private seed companies to deliver new varieties; apprenticeship systems could be tied to regional clusters; digital public goods – as CoWIN did in health services – could be extended to small-enterprise supply chains. Programmes that support women in STEM, expose youth to tech-intensive work and link under-served regions to national research networks can multiply returns on innovation.
A Broader National Fabric
Rankings measure progress; resilience is harder to win. It comes when innovation is woven into the national fabric. India has already shown what this can look like: digital public goods such as Aadhaar and Open Network for Digital Commerce (ONDC) transformed access to basic services and decentralised e-commerce. The same ambition must now extend to green technologies that reduce energy costs, advanced manufacturing that generates quality jobs, and institutional innovations that build public trust.
Moving from frugal to frontier requires not only money and metrics, but also inclusion and resilience. Only then will India’s innovation deliver both global competitiveness and domestic inclusion, fulfilling the promise of Viksit Bharat.
View as PDF
Authors:
Views are personal.