Policies for an innovative ecosystem and sustainable manufacturing in India

For a developing country like India, with its large pool of scientific talent, growing industrial base and demographic advantage, building a robust innovation ecosystem is necessary for self-reliance and global competitiveness. Yet despite a significant increase in research publications, patents and startup activities backed by government initiatives over the last decade, India continues to struggle to convert promising laboratory research into commercially viable technologies.

This lab-to-market gap is prominent in sectors dependent on chemical inputs, advanced materials and manufacturing technologies. Major challenges include a dependency on imported raw materials and chemicals, difficulties getting consumers to accept indigenous products in domestic and global markets, and inadequate marketing, packaging and international-standard compliance. In addition, incubator startup policies, along with the policies of relevant institutions and support systems, need to be geared towards supporting not just a startup culture but one that supports deep-tech startups. However, policies that address these challenges can foster innovation ecosystems and sustainable manufacturing in India.

Dependency on imported chemicals and raw materials

One of the most pressing issues facing India’s research-to-commercialisation pipeline is its heavy reliance on imported chemicals, intermediates and processing equipment. Most advanced research in chemistry, materials science and allied fields depends on the use of high-purity precursors, specialised reagents or intermediates that are not produced domestically. Even though basic raw materials are available, their refinement or high-precision processing is often outsourced to other countries, particularly China and the United States. This dependency increases costs, lengthens development timelines and undermines India’s ability to control its supply chain.

The example of photoresists is particularly instructive. Photoresists are light-sensitive polymers essential in micro/nanofabrication techniques such as photolithography for microelectronics and semiconductor applications, and are now being explored in biomedical applications, materials and energy storage.

Despite India’s strong IT sector and ambitions in semiconductor manufacturing, domestic production of photoresists is negligible, with Indian research laboratories and industries depending on imported photoresists for their development and manufacturing needs. This dependency inflates costs, limits experimentation and hinders the timely scale-up of semiconductor fabrication initiatives. This example of the strategic importance of photoresists highlights the vulnerability of India’s innovation ecosystem to external supply shocks.

Policies that could address these issues include:

Strategic raw material missions: Government-led missions should identify critical chemicals and advanced materials such as photoresists, high-purity solvents and specialty catalysts, and incentivise domestic production. These missions could combine subsidies, tax concessions and public–private partnerships to establish manufacturing capacity. Such key chemicals should be exempted from extra taxes for research purposes, encouraging researchers to explore their use and applications.

Integrated chemical clusters: Developing industrial clusters with centralised infrastructure and state-of-the-art facilities for processing, purification, hazardous-material handling and waste management can lower entry barriers for firms aiming to manufacture critical chemicals. This cluster-based approach would provide economies of scale and encourage collaboration among academia and industry (including startups, small and medium enterprises (SMEs) and large firms), overcoming the dependency on foreign suppliers.

Substitution products for high value imported chemicals: Instead of blanket import bans, India needs targeted policies that fund the research and development of indigenous substitutes for high-dependency chemicals. For example, funding translational research on alternative photoresist chemistries could both reduce dependency on imports and foster intellectual property (IP) generation. Such chemicals are essential not just for semiconductors and electronics but also in other industries such as paints, highlighting how innovation around substitutes can strengthen interdisciplinary strategies.

Long-term procurement commitments: Public procurement policies can guarantee a minimum demand for domestically produced chemicals and materials, thereby de-risking investment in manufacturing plants. For instance, commitments from government-funded semiconductor labs to procure Indian-made photoresists could catalyse private investment.

Acceptability of Indian products: standards and perception gaps

Even when Indian researchers or startups develop innovative products, they often face hurdles in achieving market acceptance. At the root of this issue lies a misalignment between domestic capabilities and international standards. Most norms for product certification and commercialisation are developed in western countries and may not account for local contexts such as climate conditions, infrastructure gaps or socio-economic variations. Consequently, products that perform well under Indian conditions may fail international certification tests, restricting their global market access. Conversely, international products certified under foreign conditions are often perceived as superior, undermining confidence in Indian alternatives.

Consider biodegradable polymers for packaging developed in Indian laboratories. While technically sound, these products often fail to meet international biodegradability or compostability standards that were defined in temperate climates with specific soil and microbial conditions. This creates a paradox: products suitable for Indian waste-management contexts are not internationally recognised, while imported ‘certified’ products may not perform optimally under Indian conditions. This also creates an unfair bias against the acceptance of Indian products within India.

Policies that could address these challenges include:

Contextualised standards development: India must strengthen its standard-setting bodies, such as the Bureau of Indian Standards (BIS), to develop protocols tailored to Indian conditions. These standards should be internationally benchmarked but adapted to local needs. Collaborative standard-setting with international organisations can ensure mutual recognition and ease of export. The imported products should be mandated to qualify Indian standards as well curated for Indian needs. This will provide Indian manufacturers with a level playing field at par with imported products.

National certification and branding: Establishing a ‘Swadeshi Innovation Mark’ that confirms that Indian-made products have been through rigorous quality assurance can boost consumer confidence. Much like the ISI mark for safety standards, such certification can signal both quality and context relevance.

Acceptance trials and demonstration projects: Government agencies can support pilot programmes where Indian innovations are tested and showcased at larger scale, for example by deploying indigenous biodegradable packaging across Indian Railways or testing domestically developed photoresists in government-backed semiconductor fabrication plants. Successful demonstrations can overcome perception barriers.

Awareness campaigns for consumers and industry: Policymakers must invest in campaigns highlighting the quality and performance of Indian innovations. These campaigns, if backed by certification and demonstrable data, can shift consumer and industry confidence towards domestic products.

Marketing, packaging and aesthetic gaps

The third barrier is the lack of marketing infrastructure and international-standard packaging facilities. Even when Indian products achieve technical parity, they often fail in global markets due to sub-optimal branding, packaging aesthetics and compliance with electronic or barcoding requirements. Packaging is not merely cosmetic: it influences shelf life, consumer trust and regulatory compliance in sectors such as pharmaceuticals, specialty chemicals and food. Inadequate packaging infrastructure undermines the competitiveness of Indian products abroad.

For instance, a startup developing advanced functional coatings or specialty polymers may produce material of excellent quality but fail to meet international buyer expectations if packaging lacks tamper-proofing, standardised labelling or is not durable enough for transport. This diminishes the product’s appeal despite strong technical merit.

Policies that could address these challenges include:

State-of-the-art packaging hubs: The government should introduce initiatives to establish packaging and marketing hubs that provide startups and SMEs with access to advanced packaging machinery, testing laboratories and design services. Such hubs can ensure compliance with global standards at affordable costs.

Training in marketing and global business practices: Alongside technical training, entrepreneurship programs should emphasise marketing, branding and international business etiquette. Partnerships with design schools and global consultants can equip Indian innovators with the soft skills required for international markets.

Incentivising sustainable packaging: India’s focus on sustainability provides an opportunity to develop biodegradable and recyclable packaging solutions. Policies that subsidise sustainable packaging adoption can simultaneously improve marketability and align with environmental goals.

Digital platforms for market access: Government-supported e-marketplaces can promote Indian innovations directly to local and global buyers, bypassing traditional middlemen. Verified platforms can enhance the credibility and visibility of domestic startups.

Toward an integrated policy framework for sustainable manufacturing

The three challenges above – dependency, acceptability and marketing – are interconnected. Imported raw materials affect cost competitiveness, which in turn undermines acceptability. Limited acceptability discourages investment in packaging and branding. An integrated policy approach is thus required to build a self-reinforcing innovation ecosystem.

This approach should involve:

Strengthening public R&D priorities: Public R&D funding must prioritise translational research, scale-up studies and process safety evaluations in sectors critical for sustainable manufacturing. Grants should explicitly support pilot plants and demonstration projects.

Startup support tailored to deep-tech: Deep-tech startups, especially in technologies emanating from chemistry and materials, require long-term investment, long development timelines and regulatory support. Instruments such as concessional loans, milestone-based grants and co-investment funds are essential.

Patent reform and technology transfer: Streamlined patent examination, affordable filing fees and stronger technology transfer offices in universities can accelerate commercialisation. Policies should also encourage the licensing of publicly funded IP to domestic startups.

Sustainability as core policy driver: All manufacturing policies should integrate sustainability goals. For instance, the domestic production of photoresists should emphasise greener chemistries and waste minimisation, aligning competitiveness with environmental responsibility.

Global collaboration with local empowerment: While self-reliance is crucial, global collaboration remains necessary. India must join international consortia for advanced technologies while simultaneously nurturing indigenous capabilities. Balanced policies that combine openness with domestic capacity building will ensure resilience.

India stands at a critical juncture in its pursuit of self-reliance and global leadership in innovation-driven manufacturing. The challenges it faces are not insurmountable but require coherent, well-designed policies that address root causes rather than symptoms. By investing in strategic raw material missions, contextualising product standards, creating packaging hubs and supporting startups with long-term investment, India can build an innovation ecosystem that is not only self-sufficient but also globally competitive.

The example of photoresists illustrates both the vulnerabilities and opportunities in aligning innovation ecosystems with sustainable manufacturing. Ultimately, India’s journey towards self-reliance, as framed by the government’s Atmanirbhar Bharat and Make in India initiatives, will depend on policies that integrate innovation, sustainability and market readiness into a unified national strategy.