Global Innovation Index 2025: China at 10, India's 38th Rank Exposes Persistent R&D Gaps
New Delhi: The Global Innovation Index (GII) 2025, released by the World Intellectual Property Organization (WIPO), marks the most significant reshuffling of the global innovation hierarchy in over a decade, with China entering the top 10 for the first time and displacing Germany to 11th place. The shift underscores a broader redistribution of innovation capacity beyond traditional Western centres. India has retained its 38th position, continuing to lead among lower-middle-income economies, but its stagnation over the last three years highlights persistent gaps in research funding and weak industry-science linkages.
As part of this year’s index, WIPO also released the Innovation Cluster Ranking 2025, which identifies the world’s most concentrated hubs of innovation by mapping the physical locations of inventors, researchers, and venture capital activity. Using geocoded analysis of patent filings, scientific publications, and VC investments, WIPO pinpoints high-density innovation zones with near-complete accuracy; 98% for inventor addresses and 99.7% for scientific authors and VC deals. The rankings illustrate the real geography of innovation, showing where research, technology development, and funding converge most intensively.
Global Innovation Slowdown
The 18th edition of the Index, titled “Innovation at a Crossroads,” tracks 139 economies and more than 100 global innovation clusters. The report highlights that global R&D growth in 2024 fell to 2.9%, the lowest level since 2009. Venture capital deals declined by 4%, and corporate R&D spending grew only 3%, sharply below the average of 8% recorded through the previous decade.
Sectors such as AI, biotechnology, and green technologies continue to attract investment, while traditional manufacturing industries including automotive and consumer goods have slowed their R&D activity significantly.
Speaking to The Wire about the slowdown, V.K. Saraswat, member of the NITI Aayog and former DRDO chief, noted that the latest GII reflects a transition phase globally. “There is a clear shift towards selective and focused R&D spending. The investment environment is tighter, and countries are prioritising sectors with high strategic value. India has to adjust quickly to remain competitive,” he said.
China’s entry into top 10; Germany slips
China’s entry at 10th place represents a historic break from the long-standing Western dominance of the top positions. China now leads globally in patent filings and is second in total R&D expenditure. The Shenzhen-Hong Kong-Guangzhou corridor continues to rank as the world’s top innovation cluster, outperforming Silicon Valley.
Germany’s drop to 11th is attributed in the report to stagnation in industrial R&D investment, delayed digital transition, and broader economic slowdown. Other top-performing countries include Switzerland (1), Sweden (2), United States (3), South Korea (4) and Singapore (5).
Commenting on the shift, Saraswat told The Wire, “China’s ascent is driven by heavy state control and aggressive, resource-intensive strategies that are not easily sustainable or replicable. India’s strength, by contrast, lies in genuine talent, open innovation, and entrepreneurial depth.”
“What we lack is not capability, but coordinated support and scale; and once that gap narrows, India’s growth will be far more durable and democratic than China’s tightly managed model,” he added.
India: Stable performance but limited acceleration
India continues to perform strongly on several indicators such as knowledge diffusion, ICT services exports, and venture ecosystem diversity. Four Indian cities feature among the top 100 innovation clusters: Bengaluru (21), Delhi (26), Mumbai (46) and Chennai, all of which improved rankings this year.
However, India’s overall innovation growth remains constrained by weak research funding and limited industry participation. India’s R&D spend remains 0.7% of GDP, significantly below China (2.4%) and South Korea (4.9%).
Terming the stagnation as “predictable”, Shailesh Nayak, Director of NIAS (Bengaluru), told The Wire: “India has capacity in academic research and strong startup activity, but translation from research to technology and product remains weak. The disconnect between science and enterprise is still very wide.”
Nayak added that without improvements in institutional coordination, India will continue to underperform relative to its potential.
Ashok Jhunjhunwala, professor at IIT Madras, emphasised on structural shortcomings. Speaking to The Wire, he said: “NITI Aayog's India Innovation Index 2021 highlighted these structural shortcomings." "India needs mechanisms that convert research outcomes into scalable enterprises. The bottleneck is not creativity but execution. We require tighter collaboration between universities, industry, and government," he added.
Industry R&D investment remains low
The report notes a persistent weakness in India’s innovation trajectory: low private-sector spending. Corporate R&D accounts for only around 35% of total national research investment, compared to 70% or more in innovation-leading economies such as the United States, Germany, and South Korea.
Ketaki Karnik, head of Research and Insights at Nasscom, said that domestic industry is risk-averse when it comes to early-stage research.
Speaking to The Wire, she said: “Most Indian companies still view R&D as a liability rather than a strategic requirement. The culture of investing ahead of profit is limited.”
Rohit Sarkar, co-chairman, CII Eastern Region Startup Sub-committee (CII National Innovation Council), added that incentives alone are insufficient.
“The ecosystem needs to reward long-term research efforts. Without stronger policy support and financial instruments, private R&D will stay conservative,” he said.
Broader geographic shift
The GII highlights significant upward movement among middle-income economies, including Türkiye, Vietnam, the Philippines, Morocco, and Iran, as well as strong relative performance in Sub-Saharan Africa, where Rwanda, Senegal, Tunisia and Malawi have been flagged as emerging innovation performers.
The report concludes that innovation capacity is becoming more geographically distributed and less exclusive to advanced industrial economies.
The road ahead
The GII argues that global innovation is being restructured rather than declining. Technological advancements; including falling battery costs, more efficient supercomputing, and cheaper genome sequencing, continue, but adoption and scaling remain uneven.
The 2025 GII confirms that global innovation leadership is undergoing a structural shift. While emerging economies are gaining space, long-standing leaders face stagnation. For India, retaining its current rank is not enough. Without stronger private-sector R&D investment, deeper industry–academia linkages, and greater national spending, the country risks missing a key period of global realignment.
Summarising India’s position, Saraswat said: “India requires a major push in coordinated national R&D strategy. A target of at least 1.5% of GDP investment over the next five years is essential if we intend to compete with global leaders.”
Jhunjhunwala, however, stressed that time is limited. He mentioned: “The gap will widen if we continue incremental improvements rather than systemic change.”
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