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The commerce and industry ministry has said that foreign direct investment (FDI) inflows in the research and development (R&D) sector have increased to $343.64 million in 2021 against $55.77 million in 2020. FDI is permitted under a 100 per cent automatic route in the research and development (R&D) sector, subject to applicable laws/regulations, security and other conditionalities.

The ministry also said that Karnataka is the top FDI equity recipient in R&D during 2021, followed by Telangana and Haryana. Singapore is the top investing country in R&D during 2021 with a 40 per cent share of the total FDI equity in R&D, followed by Germany (35 per cent) and the US (11 per cent). These trends indicate a robust and growing R&D sector which would benefit the economy by driving innovation, increasing productivity, thereby leading to higher economic growth.

It stated that R&D plays an important role in the development of a knowledge-based economy that can pave the way for higher economic growth. FDI infuses long-term sustainable capital in the economy and contributes towards technology transfer, development of strategic sectors, greater innovation, competition and employment creation, among other benefits.