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If India wants to become the third largest economy in the world, the private sector must come forward when it comes to fostering innovation, as there is a dire need for boosting business sector contribution for Gross domestic expenditure on R&D (GERD) from the current 37 per cent to close to 68 per cent, the Economic Survey 2020-21 suggested on Friday.

The Survey called for scaling up of business sector contribution to R&D by more than 50 per cent.

"For India to become an innovation leader, its residents' share in total patents applications filed in the country must rise from the current level of 36 per cent, at a CAGR of 9.8 per cent to reach the top 10 economies by 2030," it noted.

The country should also focus on certain key areas for boosting innovation like ease of resolving insolvency, ease of starting up a business, political and operational stability and regulatory quality cost of redundancies that affect businesses.

The Survey emphasised that India needs greater thrust on innovation to catapult itself to a higher growth trajectory.

"This requires boosting gross expenditure on R&D from 0.7 per cent of GDP currently to at least the average level of Gross domestic expenditure on R&D (GERD) in other 10 economies of over two per cent," the survey noted.

India entered the top 50 innovating countries for the first time in 2020 since the inception of the "Global Innovation Index" in 2007, by improving its rank from 81 in 2015 to 48 in 2020.

The country today ranks first in central and south Asia, and third among lower middle-income group economies.

However, said the Survey, India's innovation ranking is much lower than expected for its level of access to equity capital.

It stated that the government sector contributes a disproportionately large share in total GERD at three times the average of other large economies.

"However, the business sector's contribution to GERD is among the lowest in India".

The business sector's contribution to total R&D personnel and researchers also lags behind that in other large economies.