Budget 2021: Research, innovation get a boost

Finance Minister Nirmala Sitharaman spoke about ‘Innovation and R&D’ as one of the six important pillars of Budget 2021 and unveiled several measures to strengthen the public research and innovation ecosystem of India.

This comes at a time when we are witnessing the growth of the “ideas economy” globally, wherein the pace of a country’s technological progress is directly proportional to its investments in research and innovation.

Enabling entrepreneurs to propel ideas into sustainable businesses will add value to our economy in the long run and help the country achieve self-reliance thus realising Prime Minister Narendra Modi’s dream of ‘Atmamirbhar Bharat.’ The latest Economic Survey has also pointed out that India must give a significant thrust to innovation if it aims to become the third-largest economy in the world.

In her Budget, the Finance Minister has allocated ₹50,000 crore to the National Research Foundation (NRF) to be spent over a period of 5 years. The NRF has been envisaged as an umbrella body that is expected to fund research across a range of disciplines, from science and technology to humanities. It has also been tasked with seeding and building research capacity at universities and colleges.

While this is a very welcome development, I believe the private sector has a very important role to play in research and innovation in India. A much stronger focus on industry-academia partnerships is an absolute must for a robust research and innovation ecosystem in the country.

Indian pharma companies have been making exponential investments to emerge as global players. Today, India is a biotechnology and pharmaceuticals hot spot and a hub for manufacturing small molecule generics, vaccines, insulins and other biologic therapies. India’s vaccine industry led by the Serum Institute of India, Bharat Biotech, Biological E and others accounts for 50% of the global vaccine capacity. We have also attained global leadership in generics. In 2019-20, India exported $20.6 billion worth of pharmaceuticals.

The Covid-19 crisis also has led to the discovery of a deep reservoir of scientific and engineering competencies within India. The emergency has galvanized the Indian scientific community to collaborate like never before in finding interdisciplinary solutions to give the country an edge in this high-stakes battle against a deadly virus.

The Economic Survey has said that Indian pharmaceutical sector needs to rise to the opportunity presented by the pandemic and move up the value chain from generics to Novel Chemical Entities (NCEs). For this, the Survey says, the pharma industry needs to increase R&D expenditure.

Fiscal incentives, such as the tax credits and enhanced tax deductions, are key to this strategy as they allow research-oriented organizations to effectively leverage their R&D prowess for creating valuable intellectual property.

In terms of expenditure, the government’s science departments are expected to spend lower this fiscal year than what was allocated to them in last year’s Budget. It would be prudent to augment R&D spends through Industry-Academia research grants.

On the brighter side, I think ₹35,000 crore towards Covid-19 vaccination is a serious budgetary allocation that needs to be spent wisely beyond vaccine procurement. We need to utilise these funds well and include creating cold chain infrastructure and digital platforms for surveillance and pandemic preparedness. Post 2021, we need to allocate such funding to vaccine R&D for immunising our population for various viral diseases, as well as, for NCDs like cancer, diabetes, cardiac and respiratory illness.

For startups, the Budget extended the tax holiday by one more year to 31 March 2022 and also proposed the incorporation of one-person companies. Beyond that, however, the Budget did not have much to directly benefit the startup ecosystem in the country.

The government must enable and support innovative startups and businesses that think locally but have the potential to make enormous global impact. By encouraging technopreneurs to grow from SMEs to large industrial scale operations, India will be able to create a compelling opportunity to take innovative ideas to global markets. In doing so, we will be able to garner a large share of the global value chain and combine both “Make in India” and “Innovate in India” to deliver Atmanirbhar Bharat.

Views are personal. The author is Executive Chairperson, Biocon and Biocon Biologics.