Context:

• The disruption around the Strait of Hormuz highlighted India’s vulnerability as a major oil-importing nation.
• Although oil supplies could eventually be rerouted, the episode exposed a broader reality - critical supply chains are increasingly instruments of geopolitical power.
• For a country aspiring to become Atmanirbhar in critical technologies, dependence on foreign-controlled capabilities is far more consequential than dependence on a reroutable commodity such as oil.
• The strategic objective must therefore shift from merely securing supplies to building domestic technological capabilities.

India’s R&D Deficit:

• Case of China:
  • China’s rise illustrates the importance of sustained investment in R&D. It spends 2.43% of GDP on R&D, with around three-fourths financed by domestic companies.
  • This enables it to reduce dependence on foreign technologies while increasing global dependence on Chinese capabilities.
• India’s position:
  • As of 2023, India spends only 0.64% of GDP on R&D, significantly below the global average, and the private sector finances barely two-fifths of this expenditure.
  • In contrast, private enterprise contributes around three-fourths or more of R&D spending in China, South Korea and the US.

How Government is Addressing this Structural Weakness:

• ANRF - A catalyst for deep-tech innovation:
  • The Anusandhan National Research Foundation (ANRF), notified in 2024.
  • It seeks to transform India’s innovation ecosystem by bringing together academia, industry, start-ups, philanthropy and the diaspora.
• Key financial instruments of ANRF:
  • Research, Development and Innovation Fund: ₹1 lakh crore over six years for the private sector.
  • ANRF core: ₹50,000 crore over five years for foundational scientific research.
• Significance:
  • The model is designed to be catalytic rather than substitutive.
  • Public funding is intended to reduce risks and attract much larger private investment in commercialisation and scale-up.
  • Government procurement and regulatory policies are also expected to align with the emerging technology ecosystem.
• Multiple channels of industry participation:
  • Investment alongside anchor capital,
  • Direct participation as eligible technology entities,
  • Joint ventures with start-ups and Global Capability Centres (GCCs),
  • National missions,
  • Pre-competitive research challenges and CSR-supported innovation.
• The broad objective: To ensure that lack of access to capital or institutional mechanisms does not prevent willing firms from participating in research and innovation.

Industry Must Assume Greater Responsibility:

• Mobilise private capital: Companies must invest their own resources behind public catalytic funding instead of relying solely on government support.
• Choose strategic technologies:
  • Industry must prioritise sectors where technological dependence poses the greatest strategic risk.
  • Domestic capability can create long-term value, rather than focusing only on short-term gains from protected markets.
• Build long-term R&D institutions:
  • Firms need dedicated research units, corporate venture arms and strategic planning mechanisms insulated from short-term quarterly pressures.
  • Long-horizon innovation requires institutional capacity, not merely funding.
  • Such an ecosystem can also retain India’s highly trained doctoral talent, which often migrates abroad due to inadequate research opportunities and institutional support.

Lessons from India’s Pharmaceutical Industry:

• India’s pharmaceutical sector demonstrates that the domestic industry can successfully respond to technological and regulatory disruption.
• After India accepted the WTO intellectual property regime and product patents in pharmaceuticals in the 1990s, many expected domestic firms to be overwhelmed by multinational corporations.
• Instead, Indian companies developed expertise in process chemistry, regulatory compliance and large-scale manufacturing, eventually making India the “pharmacy of the world”.
• The emerging challenge in advanced technologies is broader, but the underlying lesson remains the same: strategic capability is built by investing, adapting and innovating rather than retreating in the face of competition.

A Narrow Window of Opportunity:

• India today possesses several favourable conditions:
  • A demographic dividend, though it is time-bound;
  • Robust digital public infrastructure;
  • Emerging public funding and institutional architecture for innovation;
  • A global search for alternatives to dependence on a single dominant supplier.
• These factors provide India with an opportunity not merely to catch up but to leapfrog—from being primarily a consumer of intellectual property to becoming a major generator of it.

Conclusion:

• The central lesson of the Hormuz crisis is that dependence creates vulnerability.
• While the state has initiated the institutional and financial framework for technological self-reliance, technological independence cannot be achieved through government action alone.
• The ultimate goal is not merely resilience against supply disruptions, but the creation of capabilities that make India globally indispensable.