India’s Budget Signals R&D Commitment

India continues to make significant investments in science and technology as evidenced by the government’s 2008–2009 budget proposal. The budget supports a 20.5% increase in funding for the Ministry of Science and Technology INR 3630.00 crore ($881.1 million = INR 41.20 = $1). The Ministry is one of the country’s primary funding mechanism for R&D. R&D and laboratory spending are also expected to benefit from the budget’s focus on education and infrastructure development, which drive sizable increases in funding for universities and biotechnology research.

Of the three departments that make up the Ministry of Science and Technology, the Department of Science and Technology will receive the largest share of funding at 42% of the Ministry’s budget, or INR 1530.00 crore ($371.4 million) (see table, page 3). Within this Department, the largest budget belongs to the country’s 24 “Autonomous Institutions and Professional Bodies.” In 2008, new autonomous institutions are proposed for molecular materials, innovation and cancer, among other fields. Another significant budgetary item for the Department is “Multidisciplinary Research in Science and Technology,” which includes allocations for the Science and Engineering Research Board (SERC) and accounts for 33% of the Ministry’s 2008–2009 funding, or INR 1200 crore ($291.3 million). The Department also funds nanotechnology research. Last year, India announced it would set up three Nano Science Technology Institutes to be located in Bangalore, Kolkata and Mohali at a cost of INR 100 crore ($24.3 million) each. Also last year, India pledged INR 1,000 crore ($242.7 million) over five years for the country’s Nano Science and Technology Mission plan.

Receiving the largest budget increase within the Ministry of Science and Technology for 2008–2009 is the Department of Biotechnology (DBT). The increase follows 2007’s release of the country’s biotechnology strategy, which proposed increasing biotech spending to INR 6500 crore ($1.58 billion) by 2012. The plan also recommended that 30% of the DBT’s budget go toward public-private partnerships and called for the formation of 50 biotech centers of excellence by 2010. Under the 2008–2009 budget, the DBT is expected to establish the INR 98 crore ($23.8 million) Translational Health Science and Technology Institute. As further evidence of India’s support for biotech, this month the Financial Express website reported that the DBT would soon be upgraded to a Ministry.

Other funding expected to hasten the construction of new laboratories and laboratory-related purchases is in the proposed 2008–2009 budgets for the Department of Higher Education, the Department of Agriculture and the Ministry of Home Affairs. The budget for the Department of Higher Education, part of the Ministry of Human Resource Development, includes plans for the creation of 16 Central Universities, three Institutes of Technologies (IITs) and two Institutes of Science Education and Research (IISERs). India currently has 20 Central Universities, seven IITs, which are dedicated to training engineers, and three IISERs, which are designed to function as world-class research institutes. Central Universities are supported by the University Grant Commission, which will receive INR 5104.90 crore ($1.24 billion) under the latest budget proposal. To set up the new ITTs, INR 50.00 crore ($12.1 million) is allocated in the budget, while funding for all IISERs is set at INR 150.00 crore ($36.4 million)

Also under the 2008–2009 budget, the Ministry of Agriculture is expected to establish 250 mobile soil testing laboratories at the district level within a year at a cost of INR 75 crore ($18.2 million). And the budget for the Ministry of Human Affairs specifies new funding for the country’s Central Forensic Science Laboratories, including spending for modernization and R&D.

The 2008–2009 budget plan also contains incentives to stimulate private research. The budget specifies a 125% weighted average reduction in taxes for outsourced R&D. In addition, it extends the current 150% weighted deduction for in-house R&D to companies producing seeds and other agriculture implements. In addition, the budget extends the five-year tax break for new hospitals, which applies to much of the country, including rural areas. Benefiting the pharmaceutical sector, the government proposes reducing the excise tax (a tax on domestically produced products) on drugs from 16% to 8%. In addition, five drugs, and the bulk drugs used to produce them, will be exempt from excise taxes and countervailing duties and their customs duties will be reduced from 10% to 5%, potentially boosting pharmaceutical sales due to lower drug prices. Manufacturers of ELISA kits will receive a reduction in concessional duties tp 5% for four additional items.

Drafts of the country’s 11th Five Year Plan for 2007–2012, which has yet to finalized, indicate that science funding would more than double to INR 73,304 crore ($17.79 billion) from INR 25,301 crore ($6.14 billion) over the five-year period. Proposals include the formation of Centers of Relevance and Excellence to link academia and industry and the establishment of the National Biotechnology Regulatory Authority, as well as the formation of biotech clusters in six cities (Dehli, Gujarat, Haryana, Orissa, Punjab and West Bengal). In addition, 14 new “world-class” universities and a total of 30 Central Universities (including the 16 cited in the 2008–2009 budget) are proposed. The Ministry of Human Resource Development has also announced the establishment of eight IITs (including the three for which funding is allocated in the 2008–2009 budget).

India’s fiscal year begins April 1. The budget was passed by both houses of Parliament in March and is expected to be finalized in April.

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