The Economic Advisory Council to the Prime Minister (EAC-PM) in its report titled 'R&D Expenditure Ecosystem' has said that the growth in Research and development (R&D) expenditure should be commensurate with the country’s Gross domestic product (GDP) growth and should be targeted to reach at least 2 percent of GDP by the year 2022. It noted that the line ministries at the Centre could be mandated to allocate certain percentage of their budget for research and innovation for developing and deploying technologies as per the priorities of the respective ministries.
The report has pointed out that India's spending on R&D in terms of percentage of GDP has remained stagnant over the last two decades. It has remained constant at around 0.6 percent to 0.7 percent of GDP and this is well below that in major nations such as the US (2.8), China (2.1), Israel (4.3) and Korea (4.2). To ensure that India leaps into a leadership role in innovation and industrial R&D by stimulating private sector's investment in R&D from current 0.35 percent of GDP, it suggested that a minimum percentage of turn-over of the company may be invested in R&D by medium and large enterprises registered in India.
EAC-PM also recommended that to help and keep the industry enthused to invest in R&D, there is case for not enforcing the complete withdrawal of weighted deduction provisions on R&D investment by April 1, 2020. Noting that government expenditure on R&D is undertaken almost entirely by the central government, it said there is a need for greater participation of state government and private sector in overall R&D spending. Besides, it pitched for creating 30 dedicated R&D Exports Hub and a corpus of Rs 5,000 crore for funding mega projects with cross cutting themes which are of national interest.