'Ghar Ke Sher, Global Zero': Raghuram Rajan Questions India’s Growth in Sharp Critique of Overall Economic Strategy

Raghuram Rajan questions India’s global standing in innovation despite its economic rise. His sharp column pulls no punches, here’s what he argues must change.

"We do not have one company"

India might be racing towards becoming the world’s third-largest economy, but former RBI Governor Raghuram Rajan believes the milestone is hollow if the country fails to lead in global innovation. Writing in a column for The Times of India, Rajan argues that India's corporate ecosystem is increasingly built on imitation and protectionism rather than creativity and global competitiveness.

Rajan, now a professor at the University of Chicago, points to the absence of Indian companies with worldwide consumer recognition. "We do not have one company that is known across the world for its products," he notes, drawing attention to the lack of Indian equivalents to global giants like Sony, Toyota, Mercedes, or TikTok.

He highlights that while India shields its domestic car industry with high tariffs, not a single Indian car model has found commercial success in developed markets.

Instead, Indian automobile exports remain confined to low-end, price-sensitive regions. In contrast, Rajan points to China's rise as a hub for electric vehicles, advanced battery systems, and autonomous driving technologies. The comparison, he argues, lays bare India’s failure to scale its manufacturing and tech prowess globally.

'Riskless Capitalism' and Protectionism Are Hurting Innovation

Rajan blames the structural incentives of India’s economic model for this innovation lag. Describing the ecosystem as one of “riskless capitalism,” he says that domestic champions are nurtured in overly protected environments, with the state actively shielding them from global competition.

From placing tariffs on foreign imports, even when Indian manufacturers depend on those imports, to regulatory roadblocks for foreign investors like Walmart, Rajan argues that such state actions stifle any real competitive urge among domestic firms. "Why innovate or go global,” he asks, “when steady imitation is enough to keep domestic consumers satisfied?”

This, according to Rajan, gives rise to complacency. As India's internal market grows, companies grow bigger but not better. Instead of pushing boundaries, they stay within the comfort of the domestic market, focusing on market share instead of breakthrough innovation.

Innovation Gaps in Pharma and Software

Even sectors where India holds some international weight, like pharmaceuticals and IT have under-delivered, Rajan contends. While Indian pharmaceutical companies have built a strong export market based on generics, they have largely failed to develop novel drugs or formulations. Likewise, the software industry, once a poster of India’s rise during the Y2K era, has not evolved into a creator of globally influential digital products.

“Where is the Indian TikTok, DeepSeek, ChatGPT, or even Fortnite?” Rajan asks. While Indian tech firms have launched similar platforms, he says these ventures are primarily imitative and have little to no global impact.

Weak Research Ecosystem and Bureaucratic Hurdles

Rajan cites the lack of robust university-led research and poor channels for commercialising innovation as major obstacles. While he acknowledges the recent launch of the Anusandhan National Research Foundation as a step in the right direction, he argues that funding levels are nowhere near enough to generate meaningful innovation.

More broadly, he points to bureaucratic friction in India’s higher education and research sectors. Rajan believes that these barriers must be dismantled if India wants to become a global leader in science, technology, and innovation.

Innovation Key to Economic and Strategic Strength

Rajan's column connects the dots between economic innovation and national security. Using the example of Ukraine’s war tactics, he stresses the need for smarter technologies and modern warfare systems, suggesting that innovation isn't only about consumer products but it is essential for strategic autonomy as well.

“If we are to grow rich as a nation before we grow old, we must increase GDP growth by innovating more,” he concluded. Becoming the world’s third-largest economy, in Rajan’s view, should not be the end goal. The real objective must be transforming India into one of the world’s most innovative nations, only then will its global aspirations be fulfilled.