India Targets 2% R&D Spending by 2035 to Supercharge Manufacturing
India Targets 2% R&D Spending by 2035 to Supercharge Manufacturing
India aims to boost R&D spending to 2% of GDP by 2035 to reclaim its manufacturing edge. Can private sector innovation bridge the gap? Discover the plan here.
India is at a crossroads in its journey to becoming a global manufacturing powerhouse. While the dream of 'Make in India' remains a top priority, a recent report suggests that the secret sauce to success isn't just more factories, but significantly more investment in research and development. Currently, India’s R&D spending sits at a modest 0.6 to 0.7 per cent of its GDP, a figure that experts say needs to climb to 2 per cent by 2035 if the country wants to stay competitive on the world stage.
The numbers tell a sobering story. In 2015, manufacturing accounted for 16 per cent of India’s GDP. Fast forward to 2024, and that share has actually slipped to 13 per cent. This decline highlights structural challenges in scaling up production that adds real value. Interestingly, neighboring countries like Bangladesh and Vietnam have managed to expand their manufacturing share during this same period. While India’s manufacturing sector has been growing at about 5 per cent annually, it hasn't been enough to keep pace with the overall economy's expansion.
To turn things around, the focus must shift toward innovation-driven manufacturing. This transition requires more than just government policy; it demands a massive boost in private-sector participation. Strengthening STEM education—science, technology, engineering, and mathematics—is seen as a foundational step. By fostering deeper collaborations between industry and academia, India can build a 'research-to-commercialization' pipeline that turns bright ideas into market-ready products.
The broader economic picture remains a mix of challenges and opportunities. While the United Nations recently trimmed India's 2026 GDP growth forecast to 6.4 per cent, the nation remains one of the fastest-growing major economies. Other sectors are showing immense resilience; for instance, the construction industry is booming with an 11 per cent annual growth rate, reaching a valuation of roughly $210 billion. Furthermore, the burgeoning spacetech sector is looking for ways to scale, despite currently receiving a small fraction of global capital.
Ultimately, the goal of reaching 2 per cent R&D spending by 2035 is about building long-term global competitiveness. As recent policy initiatives have already helped strengthen production capabilities, the next decade will be defined by how well India can innovate. Moving from being the world’s back office to its laboratory will be the key to ensuring that manufacturing becomes a much larger slice of the economic pie.
