INDUSTRY
Raise R&D spending to 2% of GDP to spur manufacturing: Careedge Ratings
- IBJ Bureau
- May 21, 2026
India’s manufacturing growth is constrained by low spending on research and development (R&D) at just 0.6 per cent of GDP, and the country should increase its expenditure to 2 per cent by 2035, according to a report by Careedge Ratings.
The manufacturing activity’s share in the GDP has declined to 13 per cent in 2024 compared to 16 per cent in 2015, the rating agency has said, adding that this illustrates “structural challenges” in scaling up value-added production.
Countries like Bangladesh and Vietnam have been able to expand the manufacturing share of GDP in the same period.
India’s manufacturing activity has grown at 5 per cent per year during the same period.
Careedge has added that low R&D spending of 0.6-0.7 per cent of the GDP is among the factors hampering growth in the high-employment sector.
“India should target to increase its R&D spend to 2 per cent by 2035 in line with its Asian peers to enhance the share of manufacturing in GDP, which will require greater private-sector participation, stronger innovation ecosystems and improved research-to-commercialisation pipelines,” it has stressed.
Efforts need to include strengthening the STEM (science, technology, engineering and mathematics) education, deeper industry-academia collaboration, higher private-sector R&D investment and integrated, innovation-led industrial ecosystems to build long-term global competitiveness, the rating agency has said.
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