Innovation and research by private agribusiness in India

Agricultural research and innovation has been a major source of agricultural growth in developing countries. Unlike most research on agricultural research and innovation which concentrated on the role of government research institutes and the international agricultural research centers of the Consultative Group for International Agricultural Research, this paper focuses on private sector research and innovation. It measures private research and innovation in India where agribusiness is making major investments in research and producing innovations that are extremely important to farmers. It also reviews Indian policies that influence research and innovation. This new data and policy analysis can provide India policy makers with a basis for policies that can strengthen the direction and impact of agricultural research and innovation in the future.

Agricultural innovations in India have rapidly increased since the 1980s. Government data and surveys of seed firms show that from about 1990 to 2010 the number of new seed cultivars available to farmers in maize, wheat, and rice roughly doubled, while the number of cotton cultivars at least tripled. Biotechnology innovations went from zero in the 1990s to 5 genetically modified (GM) traits in hundreds of GM cotton cultivars by 2008. Pesticide registrations went from 104 in the period 1980–1989 to 228 during the period 2000–2010. Similar growth in innovations also occurred in the agricultural machinery, veterinary medicine, and agricultural processing industries.

These innovations have come from foreign technology transferred into India as well as from in-country public and—increasingly—private research. Based on interviews with firms and data from annual reports, we find that private investment in agricultural research grew from US$54 million in 1994/95 to US$250 million in 2008/09 (in 2005 dollars). Growth in private research and development (R&D) expenditure was particularly rapid in the seed and plant biotechnology industry, which grew by more than 10 times between the mid-1990s and 2009.

Private innovations have contributed to agricultural productivity and incomes. Research and innovation by private industry led to the boom in cotton exports and to rapid increases in exports of generic pesticides and agricultural machinery. Private hybrids of cotton, rice, maize, pearl millet, and sorghum increased yields over public hybrids, varieties, and landraces. Small farmers in some of the poorest regions of India—the semiarid tropics of central India and the rainfed rice regions of eastern India—get higher productivity with private hybrids.

The increases in innovation and R&D were led by expanding demand for agricultural products, which increased demand for land-, labor-, and water-saving inputs. A second major factor was the economic liberalization that allowed large Indian corporations, business houses, and foreign firms to invest in agriculture and agribusiness. Firms’ decisions to conduct research in India were also encouraged by strong public-sector research, which provided firms with increased opportunities to develop new products with scientists, such as hybrid cultivars. Finally, research was stimulated by the availability of new tools of science, such as biotechnology, and by the recent strengthening of intellectual property rights.

Pray, Carl E.
Nagarajan, Latha
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International Food Policy Research Institute (IFPRI)
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