Lok Sabha has passed the National Research Foundation Bill, 2023, aimed at strengthening India's research ecosystem with high funding from the private sector.

About three years ago, as the Covid-19 pandemic disrupted life across the world, research into a vaccine began at the University of Oxford.

Public and charitable financing accounted for 97%-99% of the funding for the vaccine research at Oxford till 2020, with the UK government funding 95.5% of the research after that.

The Oxford-AstraZeneca vaccine, which was administered in India under the brand name Covishield, was instrumental in immunising crores of Indians. It was a key vaccine that was relatively accessible in Global South countries.

The matter of funding that supported the development of a key vaccine is worth revisiting in light of India’s proposed law to strengthen research and funding.

The National Research Foundation Bill, 2023, passed by Lok Sabha on August 7, is aimed at strengthening the country’s “research ecosystem” with significantly increased funding from the private sector.

The proposed National Research Foundation is envisioned as an apex body that will provide “high-level strategic direction for scientific research in the country” in keeping with the recommendation of the National Education Policy. It is also aimed at fostering a “culture of research and innovation throughout India’s universities, colleges, research institutions and R&D laboratories”.

The outlay for the National Research Foundation is estimated at Rs 50,000 crore for five years. The private sector will contribute Rs 36,000 crore, or 72% of the amount, through corporate social responsibility funds with the government contributing the remaining Rs 14,000 crore.

This is significant for India, which allocated just 0.7% of its gross domestic product for research and development between 1996 to 2018 – amounting to $43 per capita. By comparison, Mexico allocated $64, Brazil $173, Russia allocated $285 per capita and the US $1,778.

With the Indian government funding 60% of all research and development, the private sector’s increased contribution will make available an enormous corpus of additional funds. But this gives rise to an important question: how will greater funding by the private sector affect the type of research done in India?

Who funds what

Will funds allocated by the industry also support projects aimed at the well-being of citizens and national growth and development?

There are significant differences between how the state and industry or private sector fund projects and research. For instance, the state allocates public money while being accountable to the public and advancing long-term national interest. Private industry, however, is constrained by tight deadlines, an emphasis on next-quarter results, the highest possible profits and the need to adjust to rapid changes.

Will the estimated 72% of research funding coming from the private sector be a panacea to India’s constraints and its acute need to create an innovation economy?

Balancing needs, focus on basic research

In India, the private sector is already part of research and development in the space sector, for instance. It was involved in the launch of the Chandrayaan 3 mission in July. As astro-physicist Somak Raychaudhury notes in the The Indian Express, the lander and the rover that will be deployed on the moon were jointly manufactured by the Indian Space Research Organisation and a group of Indian companies. Also, much of the mission’s data will be processed and analysed by the private sector.

European Union data shows that the private sector provided substantial funding for research and development, based on figures from 2011 to 2021. The private sector funded 57.9% of all European Union research in 2020 as compared to 66.3% in the United States, 77.5% in China and 78.3% in Japan.

A report titled “The Perils of Complacency”, published in 2020 by the American Academy of Arts and Sciences and Rice University, carefully distinguishes between the role of the state and industry in the US research landscape.

The report notes that industry’s focus on research and development investments will be on meeting “immediate challenges”. It points out that the federal government should accelerate funding in projects that have a “low probability of obvious success at the time of funding but have the potential to be transformative in the long term”.

“Lowering the barriers to industry-university collaboration will then make it much easier for those pathbreaking discoveries to move quickly into applications, including commercial products, markets, economic growth, and high-paying jobs,” says the report.

A 2021 Committee for Economic Development report expresses concern about the falling public investment in research and development in the US since 1980. It argues for an enhanced role of the government in “funding basic research that seeds scientific breakthroughs like the internet, mRNA vaccines, the Google search engine, and the Human Genome Project”.

It is a known fact that corporations tend to invest in projects that enhance current technologies rather than discovering new ones. The report notes that companies seek “safer, product-centric investments with shorter-term returns, while the government can make bolder, riskier investments that deliver breakthroughs in general purpose science and technologies that, in turn, can spur innovation-driven economic growth across multiple sectors”.

Thus, for India, the increased participation of the private sector will have to be balanced by ensuring that basic research is not neglected.

The collaboration between the Department of Biotechnology with private companies such as the Serum Institute of India and Bharat Biotech on Covid-19 vaccines also shows how basic science research could benefit enormously from greater private sector funding.

Lessons from other countries

In China, too, the situation is similar. Jinghai Li, President of the National Natural Science Foundation of China and an Academician of the Chinese Academy of Sciences, said in a 2019 interview that China’s investment in basic research is funded by national finance as few Chinese companies pay attention to basic research.

China’s new law on science and technology advancement, which came into effect in 2022, stipulates a gradual increase in the government’s contribution to overall funding and the percentage of the gross domestic product for research and development.

China said its research spending in 2022 was 2.55% of its GDP, an increase of 0.12% from 2021, with investment in state-funded basic research alone increasing by 7.4% within one year.

After facing criticism over spending cuts on basic research since 2013, the United Kingdom in 2022 said that it aims to increase total public and private research and development investment to 2.4% of the Gross Domestic Product by 2027. In 2018, by contrast, it invested 1.8% of GDP in research.

Way ahead for India

A progressive research policy needs to have well-developed funding streams for basic science research and for applied technological innovation.

Even as the National Research Foundation Bill looks to unlock much-needed private sector funds, policymakers should not lose sight of the need to promote both, short-gestation, industry-funded and incremental research, and long-gestation, state-funded and potentially revolutionary research.

Without striking the right balance between state and private sector funding, India will risk losing the chance of coming up with truly paradigm-shattering advances and could reduce itself to becoming a consumer of science and technology emerging from the advanced countries.

This article has been authored by Prof. Chaitanya Ravi, Faculty of Public Policy, FLAME University, and Prof. Juhi Sidharth, Faculty of Public Policy, FLAME University.