Progress is neither linear nor predictable, nor does it conform to the visions of those entrusted with governing nations. Innovation flourishes in the interstices of economic incentives and intellectual curiosity. Nations prosper when their top minds innovate. India’s innovation journey is marked by immense potential rather than realised performance. While it excels in entrepreneurship and frugal, grassroots innovation, it lags in R&D intensity, institutional support, and global scientific leadership. For India to become a true innovation leader, it must radically reimagine how it identifies and nurtures talent, builds interdisciplinary collaboration hubs, strengthens IP enforcement, and supports moonshot thinking alongside incremental progress.
Why Innovation Ecosystems Thrive: Lessons from Theory
To understand how nations build enduring innovation capabilities, it is important to examine the underlying forces that fuel innovation ecosystems.
Through a game-theoretic lens, knowledge spillovers create positive-sum environments where proximity to competitors paradoxically boosts firm value through talent circulation and tacit knowledge exchange. Boston’s biotech corridor and Taiwan’s semiconductor industry thrive not despite competition, but because of it.
Douglass North’s institutional theory reminds us that both formal structures (patent laws, R&D tax credits) and informal norms (entrepreneurial culture, academic collaboration) shape innovation incentives. His theory of path dependence underscores how innovation ecosystems evolve through self-reinforcing mechanisms, either enabling breakthroughs or leading to stagnation.
Paul Romer’s Endogenous Growth Theory adds a critical dimension: innovation requires sustained policy interventions in research funding, intellectual property rights, and public-private collaboration. Silicon Valley exemplifies how venture capital (institutional scaffolding) fuels rapid iteration (competitive advantage), just as Germany’s Fraunhofer Society demonstrates how state-supported research can drive industrial innovation.
Beyond these giants, smaller ecosystems offer vital lessons: Israel’s venture-backed startup ecosystem, Switzerland’s excellence in public-private research, and South Korea’s early investments in R&D-driven sectors like robotics and semiconductors. These models prove that strategic policy, competition, and collaboration are the cornerstones of innovation leadership.
India vs China: The Missing Decades
While global innovation hubs have leveraged these dynamics, India’s trajectory stands in sharp contrast — particularly when compared to China’s systematic ascent. Con Cao’s analysis (2024) highlights that China’s gross domestic expenditure on R&D (GERD) rose from $6 billion in 1996 to over $525 billion in 2023, lifting R&D intensity from 0.6% to 2.6% of GDP. In contrast, India’s R&D spending remains below $20 billion annually, around 0.65% of GDP — a level China surpassed two decades ago.
China’s innovation leap has been strategically orchestrated through initiatives like the Thousand Talents Plan (TTP), designed to reverse brain drain by offering competitive grants, housing, tenure tracks, and institutional autonomy to top scholars from global universities. Returnees such as Shi Yigong and Chen Shiyi have not only repatriated but have transformed Chinese universities and research output.
India, despite having one of the largest scientific diasporas globally, has no comparable national program. The absence of structured talent repatriation, competitive funding, or research autonomy is not merely a missed opportunity — it constitutes a structural loss that risks permanently limiting India’s scientific sovereignty.
The Promise of the National Research Foundation
Recognising these gaps, India has launched the National Research Foundation (NRF). However, its success will depend entirely on design and execution. To transform India’s innovation landscape, the NRF must:
1. Commit to raising India’s GERD to at least 1% of GDP by 2030.
2. Offer predictable, multi-year, outcome-oriented research funding with matching grants to the private sector.
3. Create an “Industry-Academia Research Fund” to incentivise commercialisation.
4. Ensure governance is autonomous, meritocratic, and politically insulated.
5. Foster international collaboration through joint research centres and scholar exchanges.
Without these pillars, the NRF risks becoming becoming a symbolic gesture rather than a true catalyst like Germany’s Fraunhofer Society or the U.S. National Science Foundation.
India’s Private Sector: The Missing Engine
Innovation ecosystems cannot be built by governments alone. In leading economies, dynamic private sectors drive research, risk-taking, and commercialisation. Many Indian companies have demonstrated global leadership potential. Scaling this success requires expanded R&D tax credits, corporate venture capital incentives, public-private consortia in frontier technologies, and regulatory frameworks that encourage startup experimentation.
The private sector must be seen not as a follower of government policy but as a co-equal architect of India’s innovation ecosystem.
Balancing Transformative and Incremental Innovation
Beyond institutional drivers, India must also balance what kinds of innovation it pursues. As the Stanford Emerging Technologies Review 2025 highlights, sustainable growth requires advancing both transformative breakthroughs and incremental improvements. Transformative innovations such as nuclear fusion, quantum computing, and AGI must be funded alongside incremental advancements in semiconductors, material science, and automation.
History proves this interdependence: Riemann’s Hypothesis, though unsolved, catalysed breakthroughs in cryptography, leading to modern digital payments. Ignoring fundamental research today risks stalling applied innovation tomorrow.
Breaking Regulatory Shackles
Even with increased investment and talent, India’s innovation potential can be throttled by regulatory overreach. Excessive regulation stifles startups, delays research approvals, weakens tech transfer, and disincentivises deep-tech research. Strengthening intellectual property laws, accelerating patent processes, building tech transfer offices in universities, and creating regulatory sandboxes for high-risk technologies must be urgent priorities. Innovation thrives in freedom — not in permission-seeking cultures.
Betting on India’s Champions: The Talent Strategy
Removing barriers is necessary but not enough. India must actively bet on its own champions—the individuals whose brilliance can transform entire fields. Fields Medalists Manjul Bhargava and Akshay Venkatesh, Nobel Laureate Venkatraman Ramakrishnan, and mathematicians like Chandra Khare and S.R. Srinivasa Varadhan exemplify the calibre of talent India must reclaim.
The strategy must rest on three pillars: offering globally competitive salaries, research funding, and housing support; removing bureaucratic hurdles to ease relocation; and and leveraging our embassies as strategic outposts for cultivating relationships with leading researchers in globally reputed academic institutions and channeling top-tier talent into India’s innovation economy. Institutional reforms must reward merit over seniority and introduce dual-track tenure systems tied to performance and innovation.
A focused program offering world-class packages, fast-tracked appointments, and research support could attract 100 top-tier researchers at a cost of no more than Rs 300 crore annually—a negligible investment for a transformative return. History shows that scientific renaissances are sparked by a critical mass of extraordinary individuals. India’s future will be shaped by its ability to act decisively—and without delay.
Conclusion: Innovation as India’s National Destiny
Technological sovereignty is no longer a luxury; it is a national security imperative. As the global race for emerging technologies redraws economic hierarchies, India faces a stark choice: continue importing innovation or become a generator of ideas and breakthroughs. The window to reclaim leadership is narrow but real. By building robust institutions, mobilising private sector dynamism, removing regulatory shackles, and investing in the brilliance of its finest minds, India can ignite a scientific and technological renaissance like never before.
The author is a former additional chief secretary of Skill, Employment, Entrepreneurship, and Innovation Department, Government of Maharashtra
