Why the Union Budget’s Plans for Deep Tech and Research Funding are Significant

09-02-2024

11:06 AM

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Why the Union Budget’s Plans for Deep Tech and Research Funding are Significant Blog Image

Why in News?

  • In her Interim Budget speech, Finance Minister announced a Rs 1 lakh crore fund to provide long-term, low-cost, or zero-interest loans for research and development.
  • A new scheme to strengthen deep-tech capabilities in the defence sector that is likely to be followed up later was also announced.
  • The separate announcements on the fund and defence deep tech are intricately linked, and must be seen together with the government’s other plans for the R&D sector.

Significance of the Deep Tech

  • Big Scope of Deep Tech in Addressing Challenges
    • The term ‘deep tech’ is used to describe cutting-edge research in nanotechnology, biotechnology, material sciences, quantum technologies, semiconductors, artificial intelligence, data sciences, robotics, 3D printing, etc.
    • These technologies are expected to play a key role in addressing complex global challenges like climate change, hunger, epidemics, energy access, mobility, physical and digital infrastructure, and cyber security.
  • Economic Impact and Job Creation
    • Advanced capabilities in deep tech are also likely to enhance productivity and drive economic growth and create jobs in the coming years.
    • This offers a competitive advantage to countries with strong foundations in these areas.
    • With its large base of relatively high-quality science and engineering manpower and a well-established technology culture, India feels it is well placed to be one of the frontrunners in these areas.
  • Opportunities for Development
    • There is a significant scope to contribute to the development of these technologies, ensuring early adoption, shares in intellectual property, indigenous know-how, and self-reliance.
    • Major associated benefits in terms of spin-off technologies, trained manpower, entrepreneurship, and technology exports can grow as well.

Initiatives by the Government to Build a Deep Tech Ecosystem

  • National Mission on Transformative Mobility and Battery Storage
    • This mission aims to drive innovation in the field of mobility and energy storage.
    • By providing a focused platform and financial incentives, the government encourages research and development in areas such as electric vehicles, advanced battery technologies, and sustainable mobility solutions.
    • The mission is geared towards addressing challenges related to environmental sustainability and energy efficiency.
  • National Quantum Mission
    • Recognising the transformative potential of quantum technologies, the government has launched the National Quantum Mission.
    • This initiative focuses on fostering research and development in quantum computing, communication, and sensing.
    • Quantum technologies have the potential to revolutionise various industries, and the mission aims to position India at the forefront of quantum advancements globally.
  • National Deep Tech Startup Policy (NDTSP)
    • In addition to mission-driven approaches, the government has crafted a policy framework to provide a conducive environment for companies operating in deep tech sectors.
    • The NDTSP has been formulated to address specific challenges faced by technology startups and create a thriving ecosystem for their growth.
    • The NDTSP, currently awaiting government approval, reflects a comprehensive approach to building a vibrant deep tech startup ecosystem in India.

Objectives and Key Components of NDTSP

  • The NDTSP is designed to achieve several objectives, including:
    • Competitiveness: Enable startups to compete globally by fostering innovation.
    • Collaboration: Facilitate collaboration between startups and global counterparts.
    • Incentives: Provide the right incentives for companies investing in innovation and research.
  • The policy outlines key components to achieve its goals, such as:
    • Funding Opportunities: Create avenues for long-term funding to support sustained innovation.
    • Intellectual Property Rights: Establish a simplified but robust intellectual property rights regime.
    • Tax Incentives: Provide tax incentives to encourage investment in deep tech startups.
    • Regulatory Framework: Develop a conducive regulatory framework to streamline operations.
    • Standards and Certifications: Establish standards and certifications to ensure quality and reliability.
    • Talent Nurturing: Focus on nurturing talent through skill development and educational initiatives.
    • Industry-Academia Collaboration: Foster linkages between industry, research centres, and educational institutions to promote knowledge exchange.

The Challenge of Funding in Deep Tech Research

  • Inadequate Research Funding Landscape
    • The lack of sufficient research funding has been a consistent concern voiced by the scientific community.
    • India's expenditure on research falls significantly below the global average, especially in comparison to scientifically advanced nations that are direct competitors.
  • Spending Targets and Reality
    • For over two decades, the Indian government has aimed to allocate a minimum of 2% of the GDP for research and development.
    • While absolute spending has seen an increase, the percentage of GDP devoted to research has declined in recent years.
    • Presently, India allocates merely around 0.65% of its national GDP to research and development activities, notably lower than the global average of about 1.8%.

Government’s Initiatives to Overcome the Challenges

  • Public-Private Collaboration as a Solution
    • Recent government decisions indicate a realisation that substantial increases in research and development spending might be achievable only through effective partnerships with the private sector.
    • Initiatives are underway to create synergies between industry, research laboratories, and educational institutions to enhance both research activity and the funds available to support it.
  • National Research Foundation (NRF)
    • The National Research Foundation (NRF), operational since recently, is a pivotal element in this strategy.
    • It aims to address the funding challenge by sourcing approximately 70% of its Rs 50,000 crore allocation over the next five years from the private industry.
    • This collaborative approach is envisioned to foster a more sustainable and robust ecosystem for deep tech research and development in India.

The 1 Lakh Crore Corpus: Expectations, Optimism and Scepticism

  • Expectations
    • The allocation of a Rs 1 lakh crore corpus for financing research and development holds significance in the quest to bolster the research ecosystem.
    • It will be helpful particularly for startups and private sector ventures seeking seed funding.
    • The intended beneficiaries are expected to kickstart projects, and it is anticipated that these initiatives will acquire pace.
  • Optimism and Scepticism
    • While the government is optimistic about the potential impact of this substantial corpus, there is some scepticism among scientific community.
    • Previous expectations of a substantial infusion of private sector funds into research have not materialised, leading to uncertainty and concerns among researchers.
    • Scientists argue that there is an imbalance in expectations, with too much reliance on the private sector without a corresponding increase in government funding.
    • The unpredictability and inadequacy of private sector finance pose significant challenges.
    • Presently, the government appears to place considerable reliance on the success of its new initiatives to inject funds into research.
    • However, the budgetary allocations for science and research departments in the Interim Budget reveal only nominal increases.

Conclusion

  • The success of the Rs 1 lakh crore corpus hinges on effective implementation, ensuring prompt disbursement, minimising bureaucratic hurdles, and instilling confidence within the scientific community.
  • Balancing public and private sector contributions will be pivotal in creating a sustainable and robust research and development ecosystem in India.

Q1) What is an interim budget?

An interim budget, also known as a vote-on-account, is a financial statement presented by the government in an election year when a full-fledged budget cannot be presented due to the upcoming general elections. It is a temporary budget that allows the government to meet its expenditure needs until a new government is formed and can present a complete budget.

Q2) What is the purpose of an interim budget?

The primary purpose of an interim budget is to ensure the continuity of government spending and essential operations during the transitional period leading up to elections. It allows the government to obtain parliamentary approval for necessary expenditures to keep the machinery of the government running until a new budget is presented by the newly elected government. The interim budget is typically focused on essential and non-controversial expenditures, and major policy decisions are deferred to the full budget presented by the new government.


Source: The Indian Express