The Aayog, in a report titled Ease of Doing Research & Development in India – Removing Obstacles, Promoting Enablers, said the government should consider restoring a 5 per cent GST slab for R&D procurement.
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“To strengthen India’s R&D (research and development) ecosystem, there is an urgent need to significantly enhance the national investment in R&D, from the current level of 0.64 per cent to at least 2 per cent of GDP in the next four to five years,” it noted.
The report also suggested that India needs to introduce time-bound, incremental fiscal incentives to boost private sector investment in R&D.
According to the report, adding the reporting head of R&D expenditure under Schedule III (Balance Sheet & Statement of Profit & Loss) of the Companies Act 2013, Section 129, can provide for better data about private sector investment in R&D and also sensitise them to consider higher investments.
To meet the requirement of a higher fund availability for R&D, the report recommended that a more bold and forward-looking approach is required to attract philanthropic support for research and development.”This, in turn, calls for strengthening and effectively leveraging CSR provisions under the Companies Act, as well as providing higher deduction (say at least 125 per cent) for individual contributions to funds supporting R&D, under Sec. 133 (Deduction in respect of donations to certain funds, charitable institutions, etc.) of the Income Tax Act 2025,” it said.
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It is necessary to create an inter-departmental committee within the Ministry of Science & Technology, which meets at regular intervals, to target synergy and complementarity of schemes and calls across constituent departments and funding agencies, and ensure avoiding or minimising duplication of schemes across departments, according to the report.
While overall allocations have increased in absolute terms, the report noted that the level of investment relative to GDP remains low, and the funding ecosystem continues to be heavily dependent on public sources, with limited participation from the private sector and philanthropic institutions.
This is compounded by inefficiencies in the way funds are allocated, disbursed, and utilised. Researchers face complex and often repetitive application processes across multiple funding portals, long delays in proposal evaluation and fund release, and rigid financial rules that limit flexibility during project execution.
The report noted that current fund flow mechanisms, coupled with accounting and compliance requirements, often result in delays, disruptions, and underutilisation of resources.
Issues, such as limited overhead provisions and cumbersome procurement procedures, further constrain the effective use of funds, ultimately affecting the pace and quality of research, it added.
Equally significant are the challenges related to human resources, which form the backbone of any research ecosystem. Despite India’s large pool of young talent, the overall density of researchers remains low, and the system struggles to attract and retain high-quality human capital.
The postdoctoral ecosystem is particularly underdeveloped, limiting the continuity and depth of research. Delays in fellowship disbursal, rigid recruitment processes, and a large number of unfilled positions in institutions further weaken the research base.