India's gross expenditure on research and development (R&D) is one of the lowest in the world, with just $43 per capita, according to NITI Aayog's India Innovation Index 2021.

This shows that India needs to boost this expenditure and at least be on a par with its BRICS or ASEAN counterparts like Russia ($285), Brazil ($173), and Malaysia ($293), the government think tank says.

India's gross expenditure on R&D (GERD) as a percentage of GDP has been consistent and hovered around 0.7% for about a decade. This is even lower than Brazil (1.16%), South Africa (0.83%) and others. Only Mexico (0.31%) had a lower share of GERD as a percentage of GDP.

With such low contribution, R&D performance remains stagnant, NITI Aayog points out.

Despite a low expenditure on R&D, India has published more research papers than even countries like Russia, Brazil, and South Korea, among others.

In India, the government spends the most on R&D (more than 55%). "This needs to change. India needs to find that inflexion point after which the private sector can take over," says NITI Aayog.

Although R&D by businesses rapidly rose from 2005-06 onwards, it wasn't fast enough to overtake R&D by the government. "The curve for R&D by businesses needs to intersect the government R&D and rise—only then can India be on a par with the developed countries," the think tank says.

Meanwhile, Karnataka has emerged as the best among major states of the country in the third edition of NITI Aayog's India Innovation Index. Manipur has emerged as the best performer on the index among north-eastern and hilly states, whereas Chandigarh is the top performer among union territories and city states followed by Delhi.

Prepared by NITI Aayog, the India Innovation Index takes stock of the state of innovation in India. The latest edition of the survey adopts the framework of Global Innovation Index (GII), with 66 indicators across seven pillars, compared with 36 indicators before.

"The third edition of index highlights a comprehensive tool towards the country's innovation ecosystem by ranking the states and UTs based on various paradigms and building competition amongst each other for better growth and development of states and UTs," says NITI Aayog senior adviser Neeraj Sinha. "The index points to the decentralisation of innovation across all Indian states."

The index is a rigorous document that highlights the potential of states and UTs, says Institute for Competitiveness chairman Amit Kapoor. "It also highlights the lacuna in this regard and chalks out ways to fill the gaps," he adds.

The index compares the states and UTs with each other to maintain the country’s competitive spirit and provides a framework that the states and UTs can refer to, says Kapoor. "It also draws some international parallels, which will add to the learning of India and how we can be on a par with our counterparts."

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