Reforms Will Continue; Industry Needs to Spend More on R&D, Shed Protectionist Instinct: NITI Member

Why It Matters

Low R&D investment limits India’s ability to innovate and capture high‑value manufacturing, while protectionism could blunt the benefits of new trade deals. Accelerating private R&D and embracing open markets are essential for the country’s ambition to become a leading global production hub.

Key Takeaways

• India's R&D spend stuck at 0.7% of GDP
• Goal: raise R&D to match global 2.3% average
• Industry urged to shift from import to create technology
• Trust‑based governance reforms target 42,000 eliminated compliances
• New trade pacts demand reciprocal market openness

Pulse Analysis

India’s reform momentum is shifting from headline‑grabbing policy announcements to the granular work of trust‑based governance. Since 2014, the government has eliminated roughly 42,000 redundant compliances and de‑criminalised 3,700 provisions, streamlining the regulatory landscape for manufacturers and service firms. This “nuts‑and‑bolts” approach aims to replace a colonial‑era mindset of punitive oversight with a more collaborative relationship between the state and businesses, fostering an environment where companies can scale quickly and exit when needed.

A glaring weakness in the reform narrative is India’s stagnant R&D expenditure, which lingers at just 0.7% of GDP—far below the 2.3% global average and the levels seen in innovation powerhouses like South Korea and Israel. While the government funds 60% of this modest pool, private sector investment remains weak. Closing this gap is critical if India hopes to replicate the Apple‑style success stories across multiple sectors, from semiconductors to clean energy. Incentivising corporate R&D, protecting intellectual property, and building robust innovation ecosystems will convert the country’s large talent base into a strategic comparative advantage.

Finally, the push to shed protectionist instincts comes as India signs landmark free‑trade agreements with the UK, EU and New Zealand. These pacts open vast new markets but demand reciprocal access, compelling Indian firms to compete on quality and cost rather than tariffs. Coupled with the Skill India Mission’s focus on upskilling for Industry 4.0, AI and automation, the reforms set the stage for a more export‑oriented, technologically sophisticated economy. Companies that embrace open trade, invest in R&D, and prioritize workforce reskilling will be best positioned to capture the upside of India’s evolving global role.