Why is it in the News?

In her Interim Budget speech, Finance Minister Nirmala Sitharaman announced a Rs 1 lakh crore fund to provide long-term, low-cost or zero-interest loans for research and development.

Context:

• Finance Minister, Nirmala Sitharaman in her Interim Budget speech, 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.

What is Deep Tech?

• Deep tech refers to advanced and disruptive technologies, many of which are still under development, that have the potential to trigger transformative change and provide solutions for the future.
• The term is used to describe cutting-edge research in nanotechnology, biotechnology, material sciences, quantum technologies, semiconductors, artificial intelligence, data sciences, robotics, 3D printing, etc.

What are the Advantages of Deep Tech?

• 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 including:
• Economic Implications: Advanced capabilities in deep tech are also likely to enhance productivity drive economic growth create jobs in coming years, and offer a competitive advantage to countries with strong foundations in these areas.
• Opportunities for India: With its large base of relatively high-quality science and engineering manpower and a fairly well-established technology culture, India feels it is well-placed to be one of the frontrunners in these areas.
• Potential Benefits: There is scope to contribute to the development of these technologies, which can ensure 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 accrue as well.

Initiatives by the GOI to Build a Deep Tech Ecosystem

• Over the past few years, the government has tried to incentivise research in some of these areas by setting up a National Mission on Transformative Mobility and Battery Storage and, more recently, a National Quantum Mission.

National Mission on Transformative Mobility and Battery Storage:

• This mission is aimed at fostering innovation in the mobility and energy storage sectors.
  • The government encourages research and development in electric vehicles, advanced battery technologies, and sustainable mobility solutions through focused platforms and financial incentives.
  • It targets challenges related to environmental sustainability and energy efficiency.

National Quantum Mission:

• Recognizing the transformative potential of quantum technologies, the government has initiated the National Quantum Mission.
  • This effort concentrates on promoting research and development in quantum computing, communication, and sensing.
  • Quantum technologies hold promise for revolutionizing various industries, and the mission aims to position India as a leader in global quantum advancements.

National Deep Tech Startup Policy (NDTSP):

• In addition to mission-oriented strategies, the government has devised a policy framework to create a conducive environment for deep tech companies.
  • The NDTSP addresses specific challenges faced by technology startups and aims to nurture a thriving ecosystem for their growth.
  • Currently awaiting government approval, it embodies a comprehensive approach to cultivating a vibrant deep-tech startup ecosystem in India.
• Objectives and Key Components of NDTSP: The NDTSP is designed to achieve several objectives, including:
  • Competitiveness: Fostering innovation to enable startups to compete globally.
  • Collaboration: Facilitating partnerships between startups and international counterparts.
  • Incentives: Providing appropriate incentives for companies investing in innovation and research.

The policy outlines key components to achieve its goals, such as:

• Funding Opportunities: Creating avenues for long-term funding to support sustained innovation.
• Intellectual Property Rights: Establishing a simplified yet robust intellectual property rights regime.
• Tax Incentives: Offering tax incentives to encourage investment in deep tech startups.
• Regulatory Framework: Developing a conducive regulatory environment to streamline operations.
• Standards and Certifications: Establishing standards and certifications to ensure quality and reliability.
• Talent Nurturing: Focusing on nurturing talent through skill development and educational initiatives.
• Industry-Academia Collaboration: Facilitating linkages between industry, research centres, and educational institutions to promote knowledge exchange.

The Challenge of Funding in Deep Tech Research:

• Challenges in Research Funding Landscape: There's a persistent concern within the scientific community regarding the need for more research funding.
  • India's investment in research lags behind the global average, particularly in comparison to scientifically advanced nations that serve as direct competitors.
• Disparity Between Targets and Actual Spending: For more than two decades, the Indian government has set a target of allocating at least 2% of the GDP for research and development.
  • Despite an increase in absolute spending, the proportion of GDP dedicated to research has dwindled in recent years.
  • Currently, India allocates a mere 0.65% of its national GDP to research and development activities, significantly below the global average of approximately 1.8%.

Government's Initiatives to Address the Funding Challenges:

• Harnessing Public-Private Collaboration: Recent governmental directives reflect a recognition that significant boosts in research and development expenditure may only be attainable through effective partnerships with the private sector.
  • Initiatives are underway to forge synergies among industry, research laboratories, and educational institutions, aimed at bolstering both research activities and the financial resources available to support them.
• Introduction of the National Research Foundation (NRF): The establishment of the National Research Foundation (NRF), operational in recent times, stands as a key component of this strategy.
  • With an objective to tackle the funding hurdle, the NRF is set to procure approximately 70% of its Rs 50,000 crore allocation over the next five years from the private industry.
  • This collaborative model is envisioned to cultivate a more sustainable and resilient ecosystem for deep tech research and development in India.

The 1 Lakh Crore Fund: Anticipations, Enthusiasm, and Doubts:

• Anticipations: The provision of a Rs 1 lakh crore fund for financing research and development is deemed crucial in fortifying the research landscape.
  • This fund holds particular promise for startups and private sector ventures in need of initial funding to kickstart their projects.
  • Anticipations are high that these initiatives will gain momentum with the injection of funds.
• Enthusiasm and Doubts: While the government expresses optimism regarding the potential impact of this substantial fund, there exists scepticism within the scientific community.
  • Past expectations of significant private sector contributions to research have not materialized, leading to uncertainties and reservations among researchers.
  • Scientists argue that there's an imbalance in expectations, with excessive reliance on the private sector without a corresponding increase in government funding.
  • The unpredictability and inadequacy of private-sector financing present significant challenges.
  • Currently, the government appears to heavily rely on the success of its new funding initiatives for research.
• However, the budgetary allocations for science and research departments in the Interim Budget show only nominal increases.

Conclusion

• The recent initiative promises startups and other private sector ventures access to seed funding, offering potential benefits for their projects, yet, to boost R&D expenditure, fostering deeper partnerships with the private sector is essential. Initiatives are underway to enhance collaboration among industry, research laboratories, and educational institutions, aiming to diversify research activities and amplify available funding.