A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India

Radhika Trikha; Nirmala Chongtham

doi:doi:10.11648/j.stpp.20210502.14

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A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India

Radhika Trikha, Nirmala Chongtham

Published in Science, Technology & Public Policy (Volume 5, Issue 2)

Received: 29 July 2021 Accepted: 9 August 2021 Published: 10 September 2021

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Abstract

Research and Development (R&D) is one of the most essential attributes of national socio-economic growth. The United States of America (USA) is the global powerhouse and the world’s largest R&D spender with 581.6 Billion USD in PPP global R&D investments. Although, India is the 6^th largest R&D spender of the world and annually invests nearly 68 Billion USD in PPP investment in R&D which is nearly 80% less than that of the US. The US invests 2.8% of its GDP for R&D and India contributes only 0.69%. The unsatisfactory positioning of India in R&D parameters can be attributed to less than 50% participation of the private sector in the national R&D ecosystem in contrast to the US where private sectors contribute more than 70% of the total federal R&D investments. In order to enhance R&D investments in India, the private sector needs to be incentivized for stimulating its engagements in R&D. US executes strong financial support under its common programmes SBIR and STTR executed by each federal agency and creation of a Small Business Administration assemblage for business R&D. The Federal government also practices one of the most generous tax incentives on R&D expenditure incurred by the private sector across the globe. India has limited financial support provided by TDB and few ministerial departments and agencies such as DSIR and BIRAC. Moreover, India has radically truncated its tax incentivization scheme of 200% super deduction to 100% super deduction on private sector’ R&D expenditure. In the present study, a notable suggestion for enhancing private sector engagements in R&D has been drawn from the US system. The major recommendations include the introduction of target-based research credits, tax incentives on increased R&D expenditure to benefit all types of industries, creation of common industry R&D support programmes in each ministerial set up on lines of SBIR and STTR and enhancing the scope of eligibility of Industries and R&D expenditure as qualifying to avail government R&D incentives in India.

Published in	Science, Technology & Public Policy (Volume 5, Issue 2)
DOI	10.11648/j.stpp.20210502.14
Page(s)	96-104
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

R&D, Financial Support, Tax Credits, Tax Super Deduction, Incentivization, USA, India

References

[1]	UNESCO Institute of Statistics. Retrieved from http://uis.unesco.org/apps/visualisations/research-and-development-spending/
[2]	Advantage Business Media and Industrial Research Institute (2017). “2017 Global R&D funding forecast. Industry Research Institute”. Retrieved from http://digital.rdmag.com/researchanddevelopment/2017_global_r_d_funding_forecast?pg=1#pg1
[3]	UNESCO Institute of Statistics (2020). Global Investments in R&D. Fact Sheet No. 59. Retrieved from http://uis.unesco.org/sites/default/files/documents/fs59-global-investments-rd-2020-en.pdf.
[4]	The Global Competitiveness Index (GCI) Report (2018-19).
[5]	The Global Innovation Index (GII) Report (2020).
[6]	http://www.scimagojr.com/countryrank.php
[7]	IPRI Report (2017). Retrieved from http://www.internationalpropertyrightsindex.org
[8]	OECD (2015). “OECD-NESTI data collection on tax incentive support for R&D expenditures”. Retrieved from https://www.oecd.org/sti/oecd-nesti-data-collection-on-tax-incentive-support-for-rdexpenditures.pdf
[9]	OECD (2016). “Compendium of R&D tax incentive schemes: OECD countries and selected economies”. Retrieved from https://www.oecd.org/sti/rd-tax-incentives-compendium.pdf
[10]	Deloitte Touche Tohmatsu Limited (2017). “2017 Survey of global investment and innovation incentives”. Retrieved from https://www2.deloitte.com/us/en/pages/tax/articles/global-survey-ofinvestment-and-innovation-incentives.html
[11]	Mani, S. & Nabar, J. (2016). “Is the government justified in reducing R&D tax incentives”. Economic and Political Weekly, 1 (30), 22-25.
[12]	PwC (2017). “Global R&D incentives group”. Retrieved from https://www.pwc.com/gx/en/tax/pdf/pwc-global-r-and-d-brochure-april-2017.pdf.
[13]	PwC (2017). “2017 global innovation 1000 study”. Retrieved from https://www.strategyand.pwc.com /innovation 1000 19.
[14]	Biotechnology Industry Research Assistance Council (BIRAC) Brochure 2020.
[15]	Department of Science and Technology and Confederation of Indian Industry (2013). “Stimulation of investment of private sector into research & development in India”. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.694.4211&rep=rep1&type=pdf
[16]	Department of Science and Technology (2020). “Draft 5th National Science, Technology, and Innovation Policy for public consultation”. Retrieved from https://dst.gov.in/draft-5th-national-science-technology-and-innovation-policy-public-consultation.
[17]	Global Data (2020). “New incentives and tax benefits can boost R&D ecosystem for new drug development in India, says GlobalData”. Retrieved from https://www.globaldata.com/new-incentives-and-benefits-can-boost-rd-ecosystem-for-new-drug-development-in-india-says-globaldata/
[18]	Department of Science and Technology (2020). “Research and Development Statistics 2019-20”. Retrieved from https://dst.gov.in/sites/default/files/Research%20and%20Deveopment%20Statistics%202019-20_0.pdf

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Radhika Trikha, Nirmala Chongtham. (2021). A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Science, Technology & Public Policy, 5(2), 96-104. https://doi.org/10.11648/j.stpp.20210502.14

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ACS Style

Radhika Trikha; Nirmala Chongtham. A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Sci. Technol. Public Policy 2021, 5(2), 96-104. doi: 10.11648/j.stpp.20210502.14

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Radhika Trikha, Nirmala Chongtham. A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Sci Technol Public Policy. 2021;5(2):96-104. doi: 10.11648/j.stpp.20210502.14

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@article{10.11648/j.stpp.20210502.14,
  author = {Radhika Trikha and Nirmala Chongtham},
  title = {A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India},
  journal = {Science, Technology & Public Policy},
  volume = {5},
  number = {2},
  pages = {96-104},
  doi = {10.11648/j.stpp.20210502.14},
  url = {https://doi.org/10.11648/j.stpp.20210502.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.stpp.20210502.14},
  abstract = {Research and Development (R&D) is one of the most essential attributes of national socio-economic growth. The United States of America (USA) is the global powerhouse and the world’s largest R&D spender with 581.6 Billion USD in PPP global R&D investments. Although, India is the 6th largest R&D spender of the world and annually invests nearly 68 Billion USD in PPP investment in R&D which is nearly 80% less than that of the US. The US invests 2.8% of its GDP for R&D and India contributes only 0.69%. The unsatisfactory positioning of India in R&D parameters can be attributed to less than 50% participation of the private sector in the national R&D ecosystem in contrast to the US where private sectors contribute more than 70% of the total federal R&D investments. In order to enhance R&D investments in India, the private sector needs to be incentivized for stimulating its engagements in R&D. US executes strong financial support under its common programmes SBIR and STTR executed by each federal agency and creation of a Small Business Administration assemblage for business R&D. The Federal government also practices one of the most generous tax incentives on R&D expenditure incurred by the private sector across the globe. India has limited financial support provided by TDB and few ministerial departments and agencies such as DSIR and BIRAC. Moreover, India has radically truncated its tax incentivization scheme of 200% super deduction to 100% super deduction on private sector’ R&D expenditure. In the present study, a notable suggestion for enhancing private sector engagements in R&D has been drawn from the US system. The major recommendations include the introduction of target-based research credits, tax incentives on increased R&D expenditure to benefit all types of industries, creation of common industry R&D support programmes in each ministerial set up on lines of SBIR and STTR and enhancing the scope of eligibility of Industries and R&D expenditure as qualifying to avail government R&D incentives in India.},
 year = {2021}
}

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TY  - JOUR
T1  - A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India
AU  - Radhika Trikha
AU  - Nirmala Chongtham
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DO  - 10.11648/j.stpp.20210502.14
T2  - Science, Technology & Public Policy
JF  - Science, Technology & Public Policy
JO  - Science, Technology & Public Policy
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PB  - Science Publishing Group
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AB  - Research and Development (R&D) is one of the most essential attributes of national socio-economic growth. The United States of America (USA) is the global powerhouse and the world’s largest R&D spender with 581.6 Billion USD in PPP global R&D investments. Although, India is the 6th largest R&D spender of the world and annually invests nearly 68 Billion USD in PPP investment in R&D which is nearly 80% less than that of the US. The US invests 2.8% of its GDP for R&D and India contributes only 0.69%. The unsatisfactory positioning of India in R&D parameters can be attributed to less than 50% participation of the private sector in the national R&D ecosystem in contrast to the US where private sectors contribute more than 70% of the total federal R&D investments. In order to enhance R&D investments in India, the private sector needs to be incentivized for stimulating its engagements in R&D. US executes strong financial support under its common programmes SBIR and STTR executed by each federal agency and creation of a Small Business Administration assemblage for business R&D. The Federal government also practices one of the most generous tax incentives on R&D expenditure incurred by the private sector across the globe. India has limited financial support provided by TDB and few ministerial departments and agencies such as DSIR and BIRAC. Moreover, India has radically truncated its tax incentivization scheme of 200% super deduction to 100% super deduction on private sector’ R&D expenditure. In the present study, a notable suggestion for enhancing private sector engagements in R&D has been drawn from the US system. The major recommendations include the introduction of target-based research credits, tax incentives on increased R&D expenditure to benefit all types of industries, creation of common industry R&D support programmes in each ministerial set up on lines of SBIR and STTR and enhancing the scope of eligibility of Industries and R&D expenditure as qualifying to avail government R&D incentives in India.
VL  - 5
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Author Information

Radhika Trikha

Department of Science and Technology (DST)-Centre for Policy Research, Panjab University, Chandigarh, India
Nirmala Chongtham

Department of Science and Technology (DST)-Centre for Policy Research, Panjab University, Chandigarh, India

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Radhika Trikha, Nirmala Chongtham. (2021). A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Science, Technology & Public Policy, 5(2), 96-104. https://doi.org/10.11648/j.stpp.20210502.14

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ACS Style

Radhika Trikha; Nirmala Chongtham. A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Sci. Technol. Public Policy 2021, 5(2), 96-104. doi: 10.11648/j.stpp.20210502.14

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AMA Style

Radhika Trikha, Nirmala Chongtham. A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India. Sci Technol Public Policy. 2021;5(2):96-104. doi: 10.11648/j.stpp.20210502.14

Copy | Download

@article{10.11648/j.stpp.20210502.14,
  author = {Radhika Trikha and Nirmala Chongtham},
  title = {A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India},
  journal = {Science, Technology & Public Policy},
  volume = {5},
  number = {2},
  pages = {96-104},
  doi = {10.11648/j.stpp.20210502.14},
  url = {https://doi.org/10.11648/j.stpp.20210502.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.stpp.20210502.14},
  abstract = {Research and Development (R&D) is one of the most essential attributes of national socio-economic growth. The United States of America (USA) is the global powerhouse and the world’s largest R&D spender with 581.6 Billion USD in PPP global R&D investments. Although, India is the 6th largest R&D spender of the world and annually invests nearly 68 Billion USD in PPP investment in R&D which is nearly 80% less than that of the US. The US invests 2.8% of its GDP for R&D and India contributes only 0.69%. The unsatisfactory positioning of India in R&D parameters can be attributed to less than 50% participation of the private sector in the national R&D ecosystem in contrast to the US where private sectors contribute more than 70% of the total federal R&D investments. In order to enhance R&D investments in India, the private sector needs to be incentivized for stimulating its engagements in R&D. US executes strong financial support under its common programmes SBIR and STTR executed by each federal agency and creation of a Small Business Administration assemblage for business R&D. The Federal government also practices one of the most generous tax incentives on R&D expenditure incurred by the private sector across the globe. India has limited financial support provided by TDB and few ministerial departments and agencies such as DSIR and BIRAC. Moreover, India has radically truncated its tax incentivization scheme of 200% super deduction to 100% super deduction on private sector’ R&D expenditure. In the present study, a notable suggestion for enhancing private sector engagements in R&D has been drawn from the US system. The major recommendations include the introduction of target-based research credits, tax incentives on increased R&D expenditure to benefit all types of industries, creation of common industry R&D support programmes in each ministerial set up on lines of SBIR and STTR and enhancing the scope of eligibility of Industries and R&D expenditure as qualifying to avail government R&D incentives in India.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - A Comprehensive Study on Private Sector’s R&D Incentivization Landscape in USA and India: Lessons Drawn for India
AU  - Radhika Trikha
AU  - Nirmala Chongtham
Y1  - 2021/09/10
PY  - 2021
N1  - https://doi.org/10.11648/j.stpp.20210502.14
DO  - 10.11648/j.stpp.20210502.14
T2  - Science, Technology & Public Policy
JF  - Science, Technology & Public Policy
JO  - Science, Technology & Public Policy
SP  - 96
EP  - 104
PB  - Science Publishing Group
SN  - 2640-4621
UR  - https://doi.org/10.11648/j.stpp.20210502.14
AB  - Research and Development (R&D) is one of the most essential attributes of national socio-economic growth. The United States of America (USA) is the global powerhouse and the world’s largest R&D spender with 581.6 Billion USD in PPP global R&D investments. Although, India is the 6th largest R&D spender of the world and annually invests nearly 68 Billion USD in PPP investment in R&D which is nearly 80% less than that of the US. The US invests 2.8% of its GDP for R&D and India contributes only 0.69%. The unsatisfactory positioning of India in R&D parameters can be attributed to less than 50% participation of the private sector in the national R&D ecosystem in contrast to the US where private sectors contribute more than 70% of the total federal R&D investments. In order to enhance R&D investments in India, the private sector needs to be incentivized for stimulating its engagements in R&D. US executes strong financial support under its common programmes SBIR and STTR executed by each federal agency and creation of a Small Business Administration assemblage for business R&D. The Federal government also practices one of the most generous tax incentives on R&D expenditure incurred by the private sector across the globe. India has limited financial support provided by TDB and few ministerial departments and agencies such as DSIR and BIRAC. Moreover, India has radically truncated its tax incentivization scheme of 200% super deduction to 100% super deduction on private sector’ R&D expenditure. In the present study, a notable suggestion for enhancing private sector engagements in R&D has been drawn from the US system. The major recommendations include the introduction of target-based research credits, tax incentives on increased R&D expenditure to benefit all types of industries, creation of common industry R&D support programmes in each ministerial set up on lines of SBIR and STTR and enhancing the scope of eligibility of Industries and R&D expenditure as qualifying to avail government R&D incentives in India.
VL  - 5
IS  - 2
ER  -

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