From Rankings to Ownership: The Next Frontier in India's Innovation Strategy

India's rise in the Global Innovation Index must now be matched by stronger home-grown R&D, business sophistication, and unwavering emphasis on domestic intellectual property ownership.

Since 2015, the Indian government's sustained encouragement of the research and development (R&D) ecosystem, along with new science-backed policies, has contributed to a significant rise in India's overall ranking in the Global Innovation Index (GII), a metric of R&D output maintained by the World Intellectual Property Organization. From being ranked 81st globally in 2015, India rose to 38th in 2025. India also holds the top position among lower-middle-income countries and within the Central and Southern Asian region. This improving GII performance has bolstered confidence within the government.

However, for India to enter the top 10 of the GII, its science and technology (S&T) policymakers must make fundamental changes to the country's approach to innovation. India must improve its performance across the individual indicators underpinning the overall GII ranking, strengthen business sophistication within its innovation ecosystem, ensure that domestic and indigenous intellectual property applicants fare better, and reduce its dependence on the output of Global Capability Centres.

Beyond the Overall Ranking  

The Indian government aims to ascend among the leading nations in the GII. To this end, it is investing in venture stakes in strategic technology sectors such as semiconductors, artificial intelligence, and space. The approximately US$10 billion Anusandhan National Research Foundation Fund is expected to propel R&D financing across various academic and scientific disciplines. These governmental initiatives should yield these three outcomes:

First, the quantity of patents filed should not be regarded as the sole objective, despite its influence on India’s overall Global Innovation Index (GII) ranking. An increase in the number of patents granted in India, as well as in high-impact patents, should become the next shared objective for both the Indian government and the domestic private sector. Merely focusing on the quantity of patent filings, without ensuring that patents are granted and receive high peer citations, is a short-sighted approach that would ultimately yield no strategic dividends for either India’s innovation ecosystem or the national economy.

While execution matters, the technological interventions needed to address them must emerge from India's own R&D ecosystem—foreign innovation will not solve India's challenges and security threats.

Second, India's R&D output should be more directly oriented towards solving India-specific problems, whether security-related or otherwise. Many of the country's most pressing challenges are highly specific to India—from developing drought-resistant crops to preventing the movement of pests across the border from Pakistan to managing poor air quality that regularly affects megacities such as Delhi and Mumbai under certain weather conditions. These challenges undermine people's well-being and reflect poorly on governance. While execution matters, the technological interventions needed to address them must emerge from India's own R&D ecosystem—foreign innovation will not solve India's challenges and security threats.

Third, India should aim to ensure that high-value R&D output and intellectual property remain based within the country, so that India itself derives the resulting tangible and intangible social and economic benefits. There is little strategic advantage in overseas companies filing intellectual property applications through their Indian subsidiaries and R&D outposts, since such innovation offers India only superficial benefits, while its economic returns are captured elsewhere. 

The Business Sophistication Gap  

While India's overall GII ranking is widely cited, the six other categories in the GII country rankings suggest considerable scope for improvement. These are: Knowledge and Technology, Creative Outputs, Human Capital and Research, Institutions, Infrastructure, and Business Sophistication. India ranks below its overall position of 38th in five of these six categories. A conventional policy response would call for interventions across all these areas, and rightly so. However, the key to improving performance across these categories lies in strengthening the 'Business Sophistication' of the country's R&D ecosystem.

Table 1: India’s Ranking in 7 Categories of GII 2025

Source: WIPO

The metrics within the GII’s Business Sophistication category are subdivided into three distinct sub-categories: Knowledge Workers, which measures the share of employment engaged in knowledge-intensive activities; Innovation Linkages, which assesses collaboration between the public and private research sectors; and Knowledge Absorption, which includes indicators such as foreign direct investment (FDI) inflows, high-technology imports, information and communication technology (ICT) services imports, and payments for intellectual property, expressed as proportions of total trade. These are also the areas in which India's global rankings remain relatively low, falling more than 80 places behind the world's leading performers.

For instance, India ranks 101st in the employment of women with advanced degrees. Although the number of degree holders has increased, this has not translated into greater employment in high-technology sectors due to limited availability of such opportunities. This is evident in India's 95th ranking for knowledge-intensive employment. Similarly, India ranks 91st in university-industry collaboration in research and development and 81st in R&D cluster development. Together, these indicators highlight the gap between the skills and knowledge imparted by academia and the evolving demands of industry. India also ranks 107th globally in FDI net inflows to knowledge absorption sectors as a share of gross domestic product (GDP). Addressing these relatively weak indicators—or, more broadly, realising the full benefits of progress across the GII pillars—will require strengthening Business Sophistication.

Do Global Capability Centres Drive India's GII? 

The GII largely measures the number of research patents, design patents, and trademarks filed from a country, rather than the number of patents granted or their impact. These filings include applications submitted by both domestic and foreign institutions operating in India. This is where Global Capability Centres (GCCs) assume particular significance. GCCs are offshore centres established by foreign companies to undertake functions such as technology support, finance, and research and development.

GCCs located in India have been significant contributors to patent filings, primarily through patent applications filed by their parent companies. In doing so, they substantially increase the overall volume of patent filings originating from India, which may, in turn, contribute to the country's higher GII ranking.

The optimal scenario is one in which India's academia-industry interface thrives, its R&D ecosystem undertakes more advanced research and scientific megaprojects at the forefront of innovation, and the country progresses towards stronger qualitative and quantitative innovation outcomes.

By the end of 2026, GCCs are projected to generate revenue of nearly US$100 billion, directly employ close to 2 million highly skilled professionals, and operate more than 2,000 centres across India. The central and state governments place considerable value on the tax revenues generated by GCCs, the direct and indirect employment they create, and the positive economic perception they foster. However, beneath this favourable narrative, the disproportionate influence of GCCs on India's GII ranking warrants closer policy attention. While GCC-led R&D activities align with current and emerging global techno-economic trends, they are not necessarily geared towards India's own developmental and technological priorities.

The optimal scenario is one in which India's academia-industry interface thrives, its R&D ecosystem undertakes more advanced research and scientific megaprojects at the forefront of innovation, and the country progresses towards stronger qualitative and quantitative innovation outcomes. 

Innovation Ranking is a Journey, not a Destination

In 2025, the Indian subsidiaries of globally-renowned South Korean corporations, LG Electronics and Hyundai Motors, attracted exceptional investor interest upon their listings on Indian stock exchanges, surpassing the valuation of their parent companies in South Korea. Specifically, in October 2025, the market capitalisation of LG Electronics India reached US$12.83 billion, exceeding the US$9.68 billion valuation of LG Electronics Inc. Similarly, Hyundai India was valued based on higher profit-to-earnings (P/E) ratios of 26x at the time of its public offering, compared to approximately 5x for its parent company, Hyundai Motors. These figures suggest that Indian investors place a high value on the subsidiaries of technology firms that generate high-volume sales of innovative products and are willing to pay valuation premiums over their parent companies. This is despite the fact that the underlying innovation originates not in India, but in South Korea.

Although India is making progress along the innovation pathway, it is essential to recognise that innovation is a continuous journey rather than a definitive endpoint.

In April 2026, the South Korean government introduced two measures to prevent the depreciation of the stock value of parent companies, or chaebols, curb capital outflows to Indian subsidiaries, and mitigate brain drain and economic drain. Concentrating capital in the home country is crucial for boosting R&D investment and attracting highly talented professionals through competitive remuneration.

Countries such as Japan, South Korea, Israel, and Germany are creators of GCCs and are therefore recognised as innovation leaders. By contrast, countries that host GCCs—including India, Poland, Vietnam, the Philippines, and Malaysia—may serve as hubs of innovation but are not regarded as innovation leaders. The South Korean example illustrates the extensive efforts undertaken by leading innovation economies to secure leadership in research and development and sustain a strong patent portfolio, both of which significantly advance their economic and strategic interests. Although India is making progress along the innovation pathway, it is essential to recognise that innovation is a continuous journey rather than a definitive endpoint. To enter the top 10 of the GII across all six categories, India will need to invest more assertively in R&D, build a more sophisticated domestic business ecosystem, and ensure that capital remains within the country.

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