An early nose job, according to Modi.

Photographer: Noah Seelam/AFP/Getty Images

Science Struggles in India

Dhiraj Nayyar is a journalist in New Delhi. Trained as an economist, he has worked at the Financial Express, India Today and Firstpost.com. He is editor of "Surviving the Storm: India and the Global Financial Crisis."
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Last September, India put a spacecraft into orbit around Mars. Since then, boasts about the country's scientific prowess have grown outlandishly. In October, Prime Minister Narendra Modi pointed to the half-human, half-elephant Hindu god Ganesh as evidence that ancient Indians had pioneered the art of plastic surgery. Over the weekend, Science and Technology Minister Harsh Vadhan told delegates to the Indian Science Congress -- an annual gathering of the country's top researchers -- that Indian mathematicians had discovered the Pythagorean theorem and graciously allowed the Greeks to take credit. Other speakers claimed that bacteria in cow dung could turn objects into solid gold, and that 7,000 years ago, Indians were flying huge airplanes "from one planet to another."

As ludicrous as these claims are, what should really worry Indians is the current state of the country's research sector. Despite high-profile successes such as the Mars mission, and its well-known prowess in information technology, India lags badly in technological research and development. Forget 7,000-year-old planes: After more than 30 years of trying, the country still hasn't been able to develop an indigenous fighter aircraft -- technology for which is widely available globally. India spends less than one percent of its gross domestic product on R&D. China spends 2 percent, the U.S. 2.8 percent, Japan 3.4 percent and Korea 4 percent. India’s share of global R&D stands at a dismal 2.7 percent -- compared to 30 percent for the U.S. Even China now accounts for almost 15 percent of such spending, having doubled in total between 2008 and 2012.

It isn’t entirely surprising that India lays out so little on research. A majority of R&D spending takes place in the manufacturing sector -- particularly at the upper end of the value chain -- and India has a very weak manufacturing base compared with the U.S., China, Japan and Korea. In principle, any policy changes that boosted manufacturing -- Modi has promised to improve India’s ranking in the World Bank’s Ease of Doing Business Survey from 141 to 50 -- would also lead to increased R&D spending.

At the same time, though, India gets less than it should out of the money that it does spend. The fighter-jet project has stumbled along in part because state-controlled Hindustan Aeronautics Ltd. has a monopoly on the plane's manufacture. The company suffers from all the red tape and inefficiency that plagues the rest of India's huge public sector. It lacks the autonomy to make bold decisions. It can't attract top engineering talent with its rigid (and low) salary scales.

At the Science Congress, Modi emphasized the need to trim back this kind of red tape. The government should also loosen its stranglehold over state-run laboratories and technical universities such as the famed Indian Institutes of Technology (IIT). Only last week, the head of Delhi's IIT resigned under pressure from the Ministry of Education. That kind of micro-management drives talent away and shifts the focus from science and technology -- the IITs' core competence -- to managing politics.

Of course, the government has an important role to play in promoting basic research. But ideally the state should act more as a facilitator, encouraging greater cooperation between academia, laboratories and private industry and where necessary supporting R&D through financial resources (including for higher salaries to attract talent), but without managerial interference. In the U.S., federal government spending on R&D peaked at around 1.2 percent of GDP in the late 1980s. While it's since dropped under 1 percent, even now 63 percent of the funding for academic R&D in the U.S. comes from the government. In other spheres like defense, the government supports research by being a big buyer of high-tech equipment.

For India, foreign investment should provide another key source of funding. The country boasts a strong base of trained scientists and engineers available for a fraction of the cost in advanced economies. To fulfill that potential, however, the country needs to continue strengthening its weak patents regime and improving what remains a generally hostile investment for foreign businesses.

There's little time to waste -- and not just because pseudo-scientific quackery seem to be on the rise. India set up its first IIT in 1950, at a time when Korea was still wracked by civil war and China was about to embark on decades of Maoist chaos. If the country is to catch up to its Asian peers, it needs to start now.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Dhiraj Nayyar at dhiraj.nayyar@gmail.com

To contact the editor on this story:
Nisid Hajari at nhajari@bloomberg.net