Budget 2024: FM announces ₹1 trillion easy funding for sunrise sectors

Finance Minister Nirmala Sitharaman announced that the government of India will establish a ₹1 trillion corpus to incentivize innovation and research on sunrise domains. The fund will have a provision of 50 year interest free loans and will provide long term financing and refinancing for long tenures with low or zero interest rates, Sitharaman said in her budget speech.

“This will encourage the private sector to scale up research and innovation significantly in sunrise domains,” Sitharaman explained.

“We need to have programmes that combine the powers of our youth and technology,” Sitharaman added. She also said it aid research on deep tech for defence purposes, which would also enhance self-reliance.

This comes at a time when a number of major economies, including the United States, have put greater resources into financing research and innovation. Countries have raced to make breakthroughs in advanced technology domains, particularly in fields like semiconductor and artificial intelligence (AI) development. 

However, India’s spending on research and development has lagged significantly behind other major economies. While India is among the top 10 global spenders on R&D, its absolute spend lags behind smaller economies like South Korea and France. R&D spending as a percentage of GDP has also been lower than other economies such as South Korea, Israel, Switzerland and Sweden.

Meanwhile, India’s government has committed to increasing spending on this front. “The Indian government has set a target of increasing the country’s R&D spending to 2% of GDP, up from the current level of around 0.7%,” the NITI Aayog stated in a 2023 report.

“The Indian government has also introduced several policies to boost the country’s R&D capabilities, including tax incentives for companies engaged in R&D activities, and the establishment of several innovation and research parks across the country,” the report said.

Sitharaman’s announcement of a new corpus for research in sunrise domains is aimed to catalyzing increased allocations for the same.