Context

• Procurement is often seen as a dry administrative function, designed primarily to enforce transparency and contain costs.
• Yet, for research and development (R&D), procurement is far more than a compliance mechanism; it is a decisive factor in determining whether scientific ideas can be translated into breakthroughs.
• Policies that prioritise rigid control over flexibility frequently stifle innovation, while those that balance accountability with creativity can act as powerful accelerators of technological progress.
• India’s recent reforms to its General Financial Rules (GFR), which ease restrictions on R&D procurement, offer an opportunity to reposition procurement as a driver of scientific ambition rather than an obstacle to it.

The Dual Nature of Procurement

• The tension between cost efficiency and innovation in procurement is not new.
• While anti-fraud frameworks safeguard public funds, they can unintentionally suffocate research by valuing procedural compliance over scientific need.
• This was evident in India’s pre-reform system, where researchers were compelled to purchase equipment through the Government e-Marketplace (GeM), even when the platform lacked the specialised instruments necessary for cutting-edge work.
• Scientists often had to endure long exemption processes, and the portal frequently delivered substandard materials that compromised research outcomes.
• Yet procurement, if reimagined, can serve as an innovation catalyst.
• Studies show that public procurement, when targeted, stimulates private R&D investment and drives patent activity, creating a self-reinforcing cycle of technological advancement.
• Brazil’s experience, however, illustrates the danger of generic procurement rules: unless explicitly designed with innovation in mind, such frameworks rarely yield transformative results.

India’s Reforms: Incremental but Significant

• In June 2025, the Government of India introduced reforms that directly addressed many of these bottlenecks.
• By allowing institutional heads to bypass GeM for specialised equipment and raising direct purchase thresholds from ₹1 lakh to ₹2 lakh, the changes acknowledge that one-size-fits-all procurement is incompatible with the bespoke needs of research.
• Delegating authority for global tenders up to ₹200 crore to vice-chancellors and directors further reduces bureaucratic delays, a chronic grievance flagged by policymakers and scientists alike.
• These reforms embody the principles of catalytic procurement, where flexibility enables public institutions to act as early adopters of advanced technologies.

Global Lessons in Market-Shaping Procurement

• India’s reforms can be better understood in the context of global procurement evolution.
• Germany’s High-Tech Strategy, for example, institutionalises innovation-oriented procurement through KOINNO, a dedicated agency that curates supplier databases and fosters cross-sector collaboration.
• The United States’ Small Business Innovation Research (SBIR) program similarly leverages procurement contracts to derisk early-stage technologies while sustaining competition among vendors.
• South Korea’s pre-commercial procurement model even pays premium prices for prototypes that meet ambitious technological goals.
• These approaches demonstrate what economist Mariana Mazzucato terms mission-oriented procurement: the deliberate use of state purchasing power to shape technological markets.

The Debate on Privatisation and the Way Forward

• The Debate on Privatisation
  • The discussion around procurement often leads to calls for privatising national laboratories, arguing that corporate-style agility could bypass bureaucratic hurdles.
  • However, this debate risks becoming a false binary.
  • The U.S. experience with Sandia National Laboratories demonstrates that hybrid models are possible: while management shifted to a private company, government oversight remained intact, resulting in a surge of patents and industry partnerships.
  • India’s Council of Scientific and Industrial Research (CSIR) could benefit from such a hybrid approach, particularly in high-cost and strategic domains like quantum computing.
  • But this requires robust accountability frameworks and a clear alignment with national innovation roadmaps.
  • Privatisation alone, without performance-linked funding or competitive incentives, risks creating inefficiencies rather than solving them.
• The Way Forward: Toward a New Procurement Paradigm
  • India’s current reforms are necessary but insufficient. Four systemic interventions could drive deeper change.
  • First, tenders must be outcome-weighted, evaluating bids not just on cost but also on innovation potential and scalability, as seen in Finland.
  • Second, elite institutions should be granted sandbox exemptions, freeing them from rigid procurement rules if they meet externally audited innovation targets.
  • Third, India should harness AI-augmented sourcing, using tools from the INDIAai ecosystem to predict delays and scan global markets in real time.
  • Finally, co-procurement alliances, similar to the European Union’s Joint Procurement Agreement, could pool demand across Indian laboratories for expensive equipment, achieving economies of scale.

Conclusion

• Procurement is not a peripheral bureaucratic function; it is a central research variable.
• India’s GeM reforms mark an important shift toward recognising this reality, but they remain a cautious first step rather than a paradigm shift.
• By adopting global best practices in mission-oriented procurement, leveraging AI-driven tools, and experimenting with hybrid governance models, India can transform procurement into a catalyst for discovery.