Over the past decade, India has recorded visible gains in global innovation metrics, rising from 81st in 2015 to 38th in the Global Innovation Index 2025 and ranking 1st among lower-middle-income economies. India is also identified by World Intellectual Property Organisation (WIPO) as an innovation overperformer for the 15th consecutive year.

Yet these gains sit within a more difficult reality. As global innovation becomes more concentrated in large firms, frontier clusters, and capital-intensive technologies, the quality of innovation systems matters as much as their visible outputs. India’s output rank (32nd) now exceeds its input rank (52nd), suggesting that it converts a relatively thin input base into measurable outcomes, but also that the base itself remains too shallow.

This is what gives India’s rise both its significance and its limits. Gross domestic expenditure on R&D (GERD) remains about 0.65% of GDP, far below the US, Japan, and China. Just as important, the composition of that spending remains unusually skewed — the public sector accounts for 63.6% of GERD while the private sector contributes only 36.4%. This may support early capability-building, but it becomes a constraint once growth depends on scale, commercial risk-taking, and repeated firm-level investment. Countries where businesses do not lead R&D investment face growing risks of shallow innovation, weak ownership of outcomes, and limited influence over future technologies and value chains.

According to the European Commission’s EU Industrial R&D Investment Scoreboard, India has just 17 firms among the world’s top 2,000 R&D investors, accounting for €6.4 billion........

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