Preparing India for a true innovation-led economy Premium

India’s private sector must now take up the baton and rise to the challenge of driving India’s RDI story

India today presents a striking paradox in research, development, and innovation. Despite unprecedented government ambition, reflected in major funding commitments, regulatory reforms, and improving global innovation rankings, the country still continues to underperform on the fundamentals that drive innovation strength. Headlines suggest momentum, yet outcomes tell a more sobering story: low research and development (R&D) intensity, limited global technological influence, weak research-to-market translation, and persistently inadequate private-sector participation. While recent policy initiatives are necessary and welcome, India’s innovation challenge is no longer one of intent but of execution. An examination of R&D expenditure, patent scale and quality, human capital gaps, and the weak bridge between research and entrepreneurship leads to an inevitable conclusion: meaningful transformation will require far deeper systemic change, particularly from the industry.

Following the Government of India’s announcement of the ₹1,00,000 crore (approximately $12 billion) Research, Development, and Innovation (RDI) Fund last year, 2026 has begun with much promise. In her ninth consecutive Union Budget speech, Finance Minister Nirmala Sitharaman reaffirmed the government’s commitment to R&D through a ₹20,000 crore corpus for deep-tech startups, extended tax incentives, and investments in digital infrastructure. A near six-fold increase in funding for the flagship programme, Atal Tinkering Labs — from ₹500 crore to ₹3,200 crore — also highlights the focus on nurturing future innovators. The government’s intent is clear: a Viksit Bharat powered by Yuva Shakti. But whether this translates into innovation outcomes will depend on how decisively industry responds.

These measures follow closely on the removal of the three-year existence requirement that had limited the access of deep-tech startups to schemes under the Department of Scientific and Industrial Research’s Industrial R&D Promotion Programme. Late last year, the government also lifted the blanket ban on patenting inventions related to atomic energy. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025 now allows patents for the “peaceful uses of nuclear energy and radiation”, which opens the door for greater private-sector participation. Yet, as with other reforms, the real test will be whether industry invests enough to translate this openness into deployable technologies.

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