MUMBAI/NEW DELHI: India Inc. is ramping up spending on research and development (R&D), but a lack of validation and assured demand is preventing many of those innovations from reaching the market.
The bottleneck is not invention but adoption: new technologies often struggle to find buyers without policy backing, institutional trust or global precedent, leaving companies with rising R&D investments but limited commercial payoff, industry executives said at a panel discussion during the Mint India Investment Summit held last week.
Manufacturing firms, in particular, are increasing R&D spending, but say the absence of validation, at home and abroad, is becoming a key roadblock.
“R&D is growing leaps and bounds…but not in the commercial space,” said Pradeep Kumar Kheruka, executive chairman of Borosil Renewables Ltd, at the panel discussion.
Kheruka cited Borosil’s attempt to manufacture solar glass without antimony, a toxic chemical, as an example of innovation facing resistance. “We made glass without antimony…We proved that antimony is leaching out from glass, it should be banned and yet the question is how come nobody else has done it?” he said.
Despite scientific evidence, the absence of global precedent has slowed domestic adoption. China, however, has moved ahead with banning the chemical effective next month following the company’s recommendation.
In another instance, the company developed what it described as the world’s first two-millimetre tempered glass, but again faced hesitation from customers. “People would not use it because there’s no other person who’s got it or been able to make it. Even China does not have it,” Kheruka said.
High costs, uncertain returns
Across sectors, companies say innovation often requires significant upfront investment with uncertain returns, particularly when adoption remains unclear.
In renewable energy, Sael Industries has invested heavily in technologies that convert agricultural waste into power, even when costs are significantly higher than conventional alternatives.
“We spend three times the amount spent in a normal Indian boiler to not let farmers burn these in the open fields,” said Laxit Awla, chief executive officer of Sael Industries.
At the same time, companies are building capabilities in core manufacturing and process innovation.
Specialty chemicals firm Anupam Rasayan has invested in advanced manufacturing techniques to improve efficiency, safety and product quality. “What we have been able to innovate is moving from continuous to flow manufacturing that has been our biggest achievement,” said Gopal Agarwal, chief executive officer of the company.
The three firms said India’s R&D intensity, while improving, still needs to scale further.
Borosil spends about 3% of its Ebitda on R&D, while Sael allocates around 1% of its revenue. Anupam Rasayan employs close to 100 scientists across its research centres in India.
Indian companies spent ₹651.3 trillion in the last decade, but less than one per cent of that money went on research and development (R&D). As a share of net sales, spending on R&D was 0.3% in FY23, down from 0.4% in FY19, according to a Business Standard report.
Policy push
Beyond spending, executives said the bigger challenge lies in building an ecosystem that supports commercialisation rather than just capacity creation.
They pointed to the need for policy support that goes beyond incentivising manufacturing and actively encourages adoption of new technologies.
“The government needs to work with industry and set targets and say this is what we will buy,” Kheruka said, suggesting that assured demand could help new technologies scale.
There is also a need to align incentives more closely with innovation outcomes.
“There has to be parameters like R&D to sales ratio that would help drive companies to faster their innovations,” Awla said.
Government schemes such as production-linked incentives (PLI) have improved capital availability, enabling companies to invest more in capacity and, in some cases, innovation.
The PLI schemes, a flagship government initiative with a total outlay of about ₹1.97 trillion, offers incentives of 4-6% on incremental sales across 14 sectors, including electronics, pharmaceuticals and automobiles, aimed at boosting domestic manufacturing, attracting investment and increasing exports.
“Subsidy allows us to allocate that capital into innovation or R&D,” Agarwal said.
However, executives said stronger collaboration across industry, academia and government will be critical to building a sustainable innovation ecosystem.
“…a collaborative innovation approach with industry, government and academia working together,” Anupam Rasayan's Agarwal said.
They also highlighted the need for more risk capital, given the long gestation periods required for innovation.