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India stands at a critical moment in its innovation journey. Despite a strong talent base and growing market demand, Indian academia continues to underperform in producing commercially viable research. A key reason is chronic underfunding.
While exact figures on per-faculty research funds in India are not readily available, they are known to be meagre, in comparison to the average federal research funding per faculty in the US, which as reported by the US National Science Foundation in 2021 was approximately $1,50,000. This disparity has long constrained India’s academic system’s ability to produce world-class, market-ready innovations.
India has taken several steps so far, such as establishing the Anusandhan National Research Foundation (ANRF) in 2023 and appointing a full-time CEO with impeccable credentials.
Under his leadership, the ANRF aims to stimulate innovation in universities, facilitate industry-aligned translational research and bridge the gap between academic discoveries and industrial applications.
This is crucial, as India’s Gross Expenditure on R&D (GERD) is just 0.7 per cent of GDP, significantly lower than developed nations, which spend 2.5 per cent or more. A robust ANRF could potentially accelerate India’s GERD to developed country benchmarks and sustain it long term.
The goal: An IP-Led Product Nation India’s top 42 industrial sectors generated about ₹99 lakh crore in FY 22, but operated on slim margins — an average of about 8 per cent. Much of this low profitability stems from reliance on imported technologies, high royalty payments and limited IP ownership.
To match global innovation leaders — Apple, ASML— that enjoy 20%+ margins, India must indigenise critical technologies, generate IP domestically and build manufacturing capacity.
A robust, industry-linked, outcome-driven research ecosystem is required. Precisely what ANRF can enable! Aligning Innovation with Economic Strategy India’s innovation funding should be guided by a simple principle: Research must feed into national economic growth.
Sectors such as AI, quantum technologies, biotech and advanced electronics have dual advantages — strategic relevance and high global demand. With the right research and manufacturing ecosystem, India can replicate the success of its IT and e-commerce industries, which enjoy 16–24 per cent profit margins.
To reduce foreign dependence, ANRF should prioritise research aligned with sectors that drain national wealth via royalties and imports — APIs, precision tools, laser systems, battery equipment etc. If this IP and manufacturing capability are developed domestically, India’s margins and exports will both improve.
Learning from past missions: India’s Nano Mission and the current Interdisciplinary Cyber-Physical Systems and National Quantum Missions have yielded strong academic output and highly skilled talent, but minimal product commercialisation. Weak industry links, funding challenges and poor outcome tracking remain major hurdles.
ANRF must therefore ensure that future programmes are goal-driven, market-relevant, co-created with industry and held accountable for deliverables. Bridging Academia and Industry Government programmes — Ministry of Heavy Industries and Ministry of Textiles — require industry co-funding and defined deliverables. Yet many universities hesitate to engage, as their structures favour exploratory over applied research.
Can ANRF bridge this delivery gap by training faculty in proposal writing and project execution, funding translational labs on campuses and facilitating IP sharing & co-development models with industry?
Creating a closed loop, compounding innovation ecosystem: In 2022, US universities earned $3.8 billion in licensing income. Indian universities, in contrast, earn very little.
To build a closed loop, compounding innovation ecosystem, ANRF could consider prioritising funding IP-rich, industry-relevant research, supporting commercialisation through start-up and licensing assistance and reinvesting earnings into future projects. This shift — from grants to a self-sustaining innovation fund — will compound long-term impact.
Case study 1
India’s Laser Technology Opportunity India imports nearly $1 billion in industrial laser components and systems annually, in a market that is growing at a CAGR of 18 per cent. Could ANRF launch a ₹1,000-crore laser mission to develop 100 W – 5 kW fibre lasers domestically?
Outcomes of such an initiative could include significant downstream industrial value, IP royalties and the emergence of a globally competitive laser manufacturing industry.
Case Study 2
Battery manufacturing equipment: India’s demand for lithium-ion batteries is projected to reach 200 GWh by 2030.
However, the majority of battery manufacturing equipment is imported, primarily from China. The ANRF could consider investing strategically in R&D for cathode materials and the domestic production of battery manufacturing equipment. This could potentially save significantly in equipment imports, a huge reduction in downstream dependencies and bolster India’s EV and net-zero ambitions.
What can ANRF do differently
(i) Invest directly in universities: Funding should flow directly to universities and research institutions. Direct investment will build institutional capacity and accelerate long-term innovation output. By ‘encouraging’ the autonomous bodies under DST and DSIR to become self-sustaining, more resources will be available for universities.
(ii) Create a ‘Super 1000’ Faculty Program: Identify the top 1000 faculty nationwide based on performance — publications, patents, products — and provide them with long-term, flexible research grants. This peer-reviewed cohort can become India’s research vanguard, driving innovation and commercialisation.
(ii) Launch Mission-Critical Research Programmes: ANRF should fund large-scale, high-impact programmes in strategic sectors like semiconductors, AI, quantum computing, APIs, clean energy, and advanced materials.
These must be co-designed with industry and relevant ministries to ensure alignment with market needs and national priorities.
(iv) Incentivise product-oriented research: Indian academia must shift from a purely academic mindset to one focused on real-world outcomes. ANRF could offer targeted fellowships and incentives for researchers working on technologies between TRL 3–10, developing patents, or leading product development.
(v) Build a closed-loop funding model: Like a venture capital fund, ANRF could invest in projects with commercial potential, take small equity or royalty stakes, and reinvest returns into future research. This approach would create a self-sustaining innovation ecosystem.
India has the talent, markets and an urgency to become a global innovation powerhouse. ANRF could become the engine that powers deep tech research in academia, bridges the gap between labs and industry and build global champions in IP and product development.
This is not just about funding research — it’s about transforming India’s innovation economy. ANRF must consider funding what matters, track what delivers and enable researchers to become entrepreneurs and nation-builders.
With the right execution, ANRF can help India make the leap to a Product Nation, which is an integral component of a Viksit Bharat.
Sondhi, Former MD&CEO, Ashok Leyland & JCB India; Raman is Principal Research Scientist, Society for Innovation and Development, Indian Institute of Science, Bangalore. Views are personal
Published on May 16, 2025
This article first appeared on The Hindu Business Line
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