India’s research and development (R&D) ecosystem is undergoing a structural shift. According to the latest Research and Development Statistics 2025–26 released by the National Science and Technology Management Information System (NSTMIS), Department of Science and Technology, Gross Domestic Expenditure on R&D (GERD), measured at current prices, increased from Rs 79,356 crore in 2013–14 to Rs 244,768 crore in 2023–24. But relative to the economy, the increase was modest: GERD rose from 0.71 percent to 0.84 percent of GDP. NSTMIS estimates it at 0.90 percent in 2025–26.
The larger change is in who performs R&D. Business enterprises – public and private industry together – accounted for 49.3 percent of GERD in 2023–24. Central and state government research institutions accounted for 34.9 percent, higher education institutions (HEIs) for 12.6 percent and Scientific and Industrial Research Organisations for 3.2 percent.
India is therefore moving towards a more business-led R&D structure while overall R&D intensity remains low. The composition of R&D is changing faster than its scale. This does not diminish the public role. It changes it – from being the dominant performer towards also financing foundational and high-risk research, building infrastructure and enabling firms and universities to undertake more ambitious R&D. The growing business share, meanwhile, needs to be judged not only by expenditure but by the technological capabilities it creates.
Government R&D: A Smaller Performing Share, a Changing Public Role
Government institutions have long been central to Indian R&D, particularly in defence, space, atomic energy, agriculture and health. R&D performed by central and state government institutions increased from about Rs 67,859 crore in 2018–19 to Rs 85,452 crore in 2023–24, even as their share of GERD fell from about 54.4 percent to 34.9 percent.
A smaller share of performance does not imply a smaller public role. Public support remains especially important for basic research, strategic technologies, high-risk research and scientific infrastructure, where commercial incentives may be weak or returns uncertain.
The United States illustrates this distinction. Businesses performed 78 percent of US R&D in 2023, yet the federal government financed 41 percent of basic research, while higher education remained its largest performer.
India’s policy architecture increasingly reflects a similar division of labour. The Anusandhan National Research Foundation (ANRF) is intended to support foundational, applied and translational research and strengthen links among academia, research institutions and industry. The Rs 1 lakh crore Research, Development and Innovation (RDI) Scheme uses long-term, low-cost public financing to encourage private investment in higher-risk technological development.
The relevant question is therefore not simply how much R&D government performs, but how effectively public resources create the knowledge, infrastructure and financing on which research elsewhere can build.
Business R&D: A Larger Role, a Deeper Question
Business R&D is the clearest marker of this shift. NSTMIS reports that business enterprise R&D increased from Rs 48,084 crore in 2018–19 to Rs 120,609 crore in 2023–24, raising its share of GERD from 38.5 percent to 49.3 percent.
But the aggregate increase raises a more important question: how widely is technological capability spreading across Indian industry? Multinational enterprises accounted for 71.3 percent of business R&D expenditure in 2023–24, up from 49.9 percent in 2020–21. This does not mean foreign firms dominate the total: the NSTMIS category includes Indian as well as foreign MNCs. It does, however, suggest the need to look beyond the aggregate business share and ask how far sustained R&D capability extends across firms of different sizes and types.
Business R&D can range from frontier research and indigenous product development to localisation, adaptive engineering and incremental process improvements. All can be useful, but they do not create the same technological capabilities.
For domestic firms and small and medium-sized enterprises, access to testing infrastructure, prototyping finance, intellectual-property support and collaboration with universities and public laboratories can help firms move from technology adoption towards technological development.
South Korea offers a caution against reading a high business share as evidence of broad diffusion. The ten largest companies accounted for 47 percent of its business R&D expenditure in 2019. High aggregate spending and widely distributed technological capability are related goals, but they are not the same.
HEI R&D: From Capacity to Connection
Reported R&D expenditure in HEIs increased from Rs 8,797 crore in 2018–19 to Rs 30,909 crore in 2023–24, raising their share of GERD from about 7.1 percent to 12.6 percent. Public institutions accounted for 72.3 percent of HEI R&D in 2023–24 and private institutions for 27.7 percent.
The scale of this rise requires caution. Earlier NSTMIS estimates relied substantially on a DST-sponsored study using AISHE data and extrapolated expenditure, while the latest National S&T Survey used more direct institutional-level data collection. The increase therefore reflects both research activity and improved measurement; the data do not establish how much is attributable to each.
The larger policy point is clearer. Universities provide scientific talent, doctoral training and basic knowledge. As their research role expands, stronger links with firms and public laboratories can improve translation without reducing universities to contract research organisations. Shared infrastructure, collaborative research and technology-transfer mechanisms are central to that connection.
India in International Perspective: An Unfinished Transition
India is moving towards a more business-led R&D system, but remains far from the scale seen in R&D-intensive economies. Business enterprises performed 49.3 percent of India’s R&D in 2023–24, compared with about 74 percent across the OECD, 78 percent in the United States and 85.1 percent in Taiwan.
The gap in R&D intensity is larger. India’s GERD was 0.84 percent of GDP in 2023–24, compared with about 4.9 percent in South Korea, 3.4 percent in the United States, 4.0 percent in Taiwan and 2.6 percent in China.
India is therefore moving towards the composition of a business-led research system at a much lower level of overall research investment. A changing sectoral share may indicate a healthier division of activity, but it cannot substitute for the resources required for scientific infrastructure, frontier research, deep-technology development and a large research workforce.
From R&D Spending to R&D Capability
The rise of business R&D should not be read as an argument for public retreat. It requires a more strategic public role: supporting foundational and high-risk research, financing technological development where private capital is reluctant to bear early-stage risk, expanding shared infrastructure and strengthening links among universities, laboratories and firms.
Nor should the success of business R&D be measured only by its share of GERD. The more important tests are whether more firms acquire sustained research capability, whether Indian firms develop and own more technologies, and whether smaller firms can enter research-intensive production.
India therefore faces a dual task: to increase the scale of R&D and deepen the capabilities created by that investment. The success of the emerging system will depend less on which sector has the largest share than on whether public research, university knowledge and business investment reinforce one another.