Indian corporate sector lags in research spending despite three decades of reforms

India's private sector research and development spending remains significantly constrained despite sweeping economic reforms initiated in the 1990s, with cumulative R&D investment standing at a mere $7.2 billion in fiscal year 2026. The figure underscores a widening innovation gap between Indian corporations and their global counterparts, with single technology companies now outspending entire sectors of India's economy on research initiatives.

For context, Alphabet Inc. alone invested approximately $61 billion in research and development during 2025, a sum nearly nine times larger than India's entire cumulative R&D expenditure. This disparity highlights structural challenges within India Inc., where resource constraints, competing capital priorities, and limited venture funding have historically constrained investment in long-term research initiatives.

Industry analysts attribute the sluggish growth in R&D spending to multiple factors, including the dominance of capital-intensive sectors with lower innovation requirements, the prevalence of service-based business models relying on existing technologies, and insufficient domestic funding mechanisms for research-intensive enterprises. Manufacturing and technology-focused firms, which typically drive higher R&D investments, remain underrepresented in India's corporate landscape.

The relatively low R&D intensity poses strategic risks for India's long-term competitiveness, potentially limiting the emergence of homegrown technological innovations and deepening dependence on foreign technologies. Policy experts have called for renewed focus on incentivising corporate research investment through tax benefits, intellectual property protections, and targeted government support for innovation-driven enterprises across manufacturing and technology sectors.