Global Innovation Index 2025: India Secures 38th Spot, But the “0.7% R&D Gap” Alarms Policymakers
By Santosh Sinha | Policy & Economy Desk Date: November 29, 2025
New Delhi: The release of the Global Innovation Index (GII) 2025 this week has brought a mixed bag of cheer and caution for India’s economic planners. While India has firmly secured the 38th position among 139 economies-solidifying its leadership in the Central and Southern Asian region-the headline ranking hides a structural fragility that is becoming impossible to ignore.
For the third consecutive year, India’s Gross Expenditure on Research and Development (GERD) has stagnated at 0.7% of GDP. This figure stands in stark contrast to the global innovation leaders India aspires to compete with: the United States (3.5%), China (2.4%), and South Korea (4.9%).
As the government pushes for a Viksit Bharat (Developed India) by 2047, the GII 2025 report serves as a reality check: India is excelling at “Innovation Outputs” (what we create) but is critically underinvesting in “Innovation Inputs” (what we spend).
The “38th Rank” Paradox: punching Above Weight?
India’s performance in the GII 2025, published by the World Intellectual Property Organization (WIPO), continues to defy its income level. India ranks 1st among lower-middle-income economies, performing significantly better on innovation outputs than its development level would predict.
The report highlights specific bright spots where India is world-class:
- Knowledge & Technology Outputs (Rank 22): India is a global heavyweight in IT service exports and scientific publications.
- Market Sophistication (Rank 38): driven by a mature financial sector and rapid credit deployment.
- Venture Capital: India remains the 3rd largest startup ecosystem globally, with a unicorn count that continues to rise despite the “funding winter” of previous years.
However, the “Input” side of the ledger tells a different story. India ranks a dismal 61st in Infrastructure and 64th in Business Sophistication. This disparity suggests that Indian innovators are succeeding despite the system, not because of it.
The Critical Gap: Where is the Private Sector?
The most damning statistic from the 2025 data is the composition of R&D spending. In advanced innovation economies, the private sector typically accounts for over 70% of total R&D expenditure. In India, the private sector contributes less than 37%.
“We have a culture of ‘Jugaad’ (frugal innovation), but Jugaad doesn’t build quantum computers or 6G networks. That requires deep capital. The Indian private sector has largely been content with technology adoption rather than technology creation,” notes a senior economist at the NITI Aayog.
This risk aversion is visible in the manufacturing sector. While Indian companies are eager to utilize the Production Linked Incentive (PLI) schemes to assemble goods, few are investing their profits back into fundamental research to create the next product.
The Government’s “₹1 Lakh Crore” Gamble
Recognizing that moral suasion hasn’t worked, the government has moved to financial aggression.
Earlier this month, Prime Minister Narendra Modi operationalized the ₹1 Lakh Crore Research, Development, and Innovation (RDI) Scheme. Managed under the aegis of the newly formed Anusandhan National Research Foundation (ANRF), this fund is designed to break the private sector’s inertia.
How the RDI Fund Changes the Game: Unlike traditional grants that just give money away, the RDI scheme offers long-term, interest-free (or low-interest) loans specifically for private sector R&D projects in high-risk domains.
- Target Sectors: The fund is prioritized for “Sunrise Sectors” where the return on investment (ROI) is not immediate-Green Hydrogen, Small Modular Reactors (Nuclear), Space-Tech, and AI Compute Infrastructure.
- The Logic: By providing cheap capital for the “risk phase” of product development, the government effectively de-risks the innovation process for corporates like Tata, Reliance, and Mahindra, as well as deep-tech startups.
The China Comparison
The pressure to breach the top 30 is not just about prestige; it is about geopolitical survival. The GII 2025 report notes that China (Rank 10) remains the only middle-income economy in the top 30.
China’s ascent was powered by a massive, state-directed pivot to private R&D in the early 2010s. India is attempting to replicate that transition in 2025. With the “China+1” strategy bringing global manufacturing to Indian shores, the window to upgrade from an “Assembly Hub” to an “Innovation Hub” is narrow.
What Needs to Happen in 2026
For India to crack the top 30 by the next GII edition, three things must happen:
- University-Industry Linkage: India ranks poorly in university-industry R&D collaboration. The ANRF is tasked with forcing universities to work on industry-relevant problems.
- IP Protection: While patent filings have surged, the time taken to grant a patent in India is still slower than global peers. This administrative lag disincentivizes inventors.
- The “Deep-Tech” Pivot: The Indian startup ecosystem must move beyond consumer apps (quick commerce/fintech) to hard-tech (semiconductors/robotics), which attracts higher R&D multiples.
As the financial year closes, all eyes will be on the uptake of the RDI fund. If India’s corporate giants bite, the 0.7% GDP figure might finally inch upward. If not, India risks being stuck in the “Middle-Innovation Trap”-good at using technology, but unable to invent it.