Missing Inflexion Point: India’s limited corporate R&D presence in the world
As the global economy in uncertain times continues to be shaped by geopolitical tensions, tariff wars, and the adoption of Artificial Intelligence, there is only one certainty for economies around the world that are climbing on the innovation trajectory frontier. For economies, one thing is certain: research and development remain key to driving innovation and productivity. This reality matters more than ever, especially for India. This is not about climbing the Global Innovation Index performance scoreboard, which has improved from 81st in 2015 to 38th in 2025. It is about the country’s limited presence in global corporate R&D.
As per the 2025 edition of the EU Industrial R&D Investment Scoreboard, only 17 Indian companies feature in the world’s top 2000 R&D companies list compared with hundreds of firms in the United States (674), China (525), Japan (192) and the EU (318). The annual report analyses these companies, which together drive over 90 per cent of R&D by business sector worldwide. Interestingly, data also shows that not only does the US have 673 companies on the list, but it has more than twice as many as the EU. It is, on average, also increasing its investment at almost twice the speed of the EU companies. This is not accidental; it is a reality of the global innovation landscape.
India’s innovation landscape faces the biggest challenge that the government sector still contributes around 64% of total Gross Expenditure on Research and Development (GERD), while the private sector accounts for about 36%. Whereas, in developed economies, the trend is opposite. With R&D spending undertaken by more than 50 per cent by business enterprises and the higher education sector. Therefore, it is unsurprising that Indian enterprises have a limited presence on global forums. The same forums on which the world’s most powerful and recognisable companies, such as Amazon, Alphabet, Meta, Microsoft, Apple, and NVIDIA, and others, dominate the discourse. According to the Scoreboard data, these 6 companies based in the United States alone account for a 15.7 per cent share of R&D spending among the world’s top 2000 companies. On the other hand, India’s overall corporate R&D spending is just €6.4 billion, representing 0.44 percent of global corporate R&D on this list.
China alone invests around €233 billion in corporate R&D, which is around 36 times that of Indian firms, and roughly equivalent to the entire European Union, while the United States is around €680 billion, more than 100 times that of Indian corporate R&D spending. Japan also surpasses India with €112 billion. Between 2013 and 2022, Indian subsidiaries of US Multinational enterprises recorded the largest inflow from the US, amounting to €35 billion, whereas Indian Multinational enterprises invested only €1.8 billion in their US-based affiliates. This concentration reveals a central truth: economic growth and innovation leadership, which drives technological disruptions, are not shaped by market size and large-scale firms alone. It is shaped by those who invest most in developing knowledge outputs, new technologies, and business models, which, in turn, determine who succeeds in this chaos. These companies define how economies move globally, how the productivity frontier shifts, and at times, how resilient global value chains remain.
It is also evident in the overall corporate R&D spending structure of 17 companies. Only one company, Tata Motors, which ranks 63rd globally, accounts for 58 percent of Indian corporate R&D. The other 16 companies are all ranked well beyond the global top 500, with a combined spend of around €2674 million, which is less than Tata Motors R&D spending of €3714 million. India’s corporate R&D profile is largely concentrated in automobiles and health-related industries, whereas in other countries like China, R&D activity is more diversified, spanning ICT producers, ICT services, construction and advanced manufacturing, whereas Brazil’s is heavily skewed towards energy and industrial sectors. Even though India’s sectoral focus reflects participation in relatively advanced industries, diversification and technology intensity to drive global leadership are still missing elements in companies.
Beyond these statistics lies a deeper structural issue: India has not yet reached a critical inflexion point that these successful innovations have. From empirical evidence around the world, developed economies have accumulated skilled researchers, industrial capabilities, and funding for advanced research, reaching an inflexion point at which business R&D overtakes government R&D and becomes the primary engine driving the innovation landscape. This transition has happened in the US, Japan & EU countries like Germany, and more recently in China, where sustained public investment in universities and research institutes takes the lead, followed by private R&D expansion.
Yet India remains far away and is yet to undergo this transition. Pressure on the Central government to build a research ecosystem continues, with the country expecting results from the Anusandhan National Research Foundation (ANRF), which aims to seed, grow, and promote R&D, while this may help build universities, colleges, and research institutions around the country. This is a transformative step in changing the discourse of India’s research landscape, but it is not enough to generate a sufficiently large, risk-taking, and innovation-driven output with weak private-sector participation. For long-term competitiveness, this structural imbalance needs to be addressed, as it reveals a persistent gap between India and the world’s leading innovative economies. This gap is reflected in the patent intensity of innovative clusters relative to the world, in scientific publications, in limited venture capital investment, and in India’s broader innovation outcomes. India doesn’t lack the capability to build a thriving, innovative ecosystem; it possesses all the right ingredients, be it human capital, the startup landscape, or grassroots innovators, but it still lacks the private-sector dynamism to turn knowledge inputs into outputs. The long-term consequence of this is that India’s most promising talent seeks better opportunities abroad, as they prefer thriving, business-innovative ecosystems for career pathways.
Right now, the challenge for India is not simply to increase R&D spending relative to GDP to at least 2 per cent, but to enable a transition from a public-sector-led innovation ecosystem to a business-led one. The lessons from the world’s most innovative companies are clear. Until we acknowledge the current limitations, our presence in the innovation hierarchy will remain limited, regardless of our demographic dividend or growth potential, because innovation is the pivot on which a country’s long-term competitiveness rests.
Amit Kapoor is Chair at the Institute for Competitiveness, and Sheen Zutshi is a Research Manager at the Institute for Competitiveness.
The article was published with Economic Times on January 19, 2026
