Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse

Jawahar Surisetti

India has learnt to do a great deal with very little. The Global Innovation Index 2026 confirms it.The next question is whether doing more with less can carry a nation of 1.46 billion into the front rank.

World Intellectual Property Organisation's 19th edition arrives in a world pulling two ways. At the frontier, money is concentrating. Global venture capital rose 27.9 percent to USD 510 billion in 2025, yet the number of deals fell for a fourth straight year. Artificial intelligence took 53 percent of that value in 2025 and 77 percent in the first half of 2026. Corporate R&D among the top spenders reached a record USD 1.5 trillion. At the base, innovation is spreading wider, into middle-income economies from Morocco to Vietnam. Switzerland, Sweden and the United States still lead. China, at 10th, remains the only middle-income economy among them.

Where India stands

India holds 38th place among 139 economies, with a score of 40.1. It is first among 36 lower-middle-income economies and first in Central and Southern Asia, well ahead of Kazakhstan (73rd). For the 16th consecutive year it is an "innovation overperformer", delivering more than its income level predicts. Only Vietnam matches that record.

The single most telling number is the gap between what India puts in and what it gets out. India ranks 49th on innovation inputs but 25th on outputs. Few large economies convert so efficiently. Yet the input rank is the warning. Institutions stand at 60th, human capital and research at 54th, infrastructure at 62nd and business sophistication at 63rd. India is running a high-performance engine on a thin fuel line.

What is working

India's climb has its own route. China built a research base. Vietnam and the Philippines rose through manufacturing networks. India rose on digital services and entrepreneurial capital.

ICT services exports: 1st in the world. Software, IT and business services make up 14.1 percent of India's total trade, the highest share of any economy. This rests on three decades of IT services firms, global capability centres and a large English-speaking engineering workforce.

Market and capital: 3rd in domestic market scale, 4th in late-stage VC deals, 8th in finance for startups and scaleups. India's economy of about USD 17.7 trillion (PPP) gives founders a huge home market. Indian firms account for 1.5 percent of all late-stage VC deals worldwide, and executives rate access to startup finance highly.

Value creation: 7th in knowledge impact, 10th in unicorn valuation relative to GDP, 12th in labour productivity growth, 15th in knowledge and technology outputs. Labour productivity grew about 4 percent, and India's broad base of unicorns is worth around 5 percent of GDP. Strong rankings in patents by origin (16th), research citations (18th) and high-tech manufacturing (32nd) lift the outputs pillar.

Investment magnet: One of 16 global R&D and high-tech investment hubs. China is the only other middle-income economy on that list. India attracted the second-largest number of announced green-field R&D and high-tech projects in 2025, after the United States. It is above the world average for both investment coming in and Indian firms investing abroad.

Clusters: Four in the global top 100. Bengaluru is 25th, Delhi 27th, Mumbai 43rd (up three) and Chennai 79th (up five). Together they produced over 10,300 international patent applications and more than 7,600 VC deals, anchored by IISc, the IITs, Samsung, Jio and TVS Motor. Mumbai's patent applications rose 38 percent, and Chennai improved on patents, publications and VC alike.

The most encouraging signal comes from this year's special theme, deep science entrepreneurship. India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China. Qure.ai, with 37 patent families, is second only to Malaysia's Lemonex among middle-income patent holders. Skyroot Aerospace and SEDEMAC Mechatronics, an IIT Bombay spinout, show that Indian laboratories can produce real companies.

The glass ceiling

The report names a pattern it calls an innovation glass ceiling. Middle-income climbers catch up fast in production, exports, startup finance and patents. They stall in the knowledge base and R&D, where capacity builds slowly. China broke through, reaching high-income levels on 21 of 25 benchmarked indicators. India has the second-broadest profile among the climbers, but WIPO says it remains thin in researchers and scientific output.

The numbers are sobering:

University-industry R&D collaboration ranks 76th and cluster development 75th. Our great hubs are large but not dense. Delhi is 27th in the world by scale but 96th by intensity, the widest such gap of any top-100 cluster. Bengaluru and Mumbai follow the same pattern. International PCT patent filings also fell 32 percent in 2025, though WIPO reads this as a return to normal after exceptional years.

What India must do next

The report's own prescription is clear: keep the market strengths and add the slower-building research system. Seven moves would do the most.

1. Raise R&D toward 2 percent of GDP, led by business. Firms finance about 40 percent of India's R&D but perform only 0.2 percent of GDP. Tax credits, matched grants and government procurement as a first customer can shift that.

2. Turn teaching universities into innovation universities. NEP 2020 must reach beyond curriculum reform into research, intellectual property and spinouts. Universities should be judged on licences, startups and industry-funded research, not only enrolment and placements.

3. Professionalise technology transfer. Every serious university needs a trained transfer office, standard IP terms and shared prototyping labs. The deep science chapter shows how much value sits in patents that never leave the lab.

4. Bridge the valley between pilot and pipeline. The India Deep Tech Alliance and the National Deep Tech Startup Policy are a start. Patient capital is needed for the long, costly step from prototype to manufacturing.

5. Build research talent at scale. India needs far more researchers per million people, more PhDs working in industry and more international students and faculty on its campuses.

6. Bring women into knowledge work. A rank of 103rd is not only a question of equity. It means half of the country's trained talent is underused.

7. Spread innovation beyond four metros. Tier-2 cities with industrial bases, such as Bhilai, Coimbatore, Pune or Visakhapatnam, can become intensive regional clusters. Their universities can solve the problems of nearby steel, energy, farm and manufacturing firms.

From performer to powerhouse

India's 38th place is an achievement, not a destination. Sixteen years of overperformance show a nation that knows how to convert talent and ambition into value. But WIPO's warning is plain: middle-income economies that rely on market strengths alone tend to plateau. The goal is not simply to move from 38th to 30th. It is to build a system that produces frontier science, owned intellectual property and high-value jobs. That means moving from services to science, from startups to scientific enterprises, and from teaching campuses to innovation universities. The next decade will decide whether India stays an innovation overperformer or becomes an innovation powerhouse.

(The writer is a noted educationist, psychologist, and author)