A case for establishing Special Science Zones in India

Takshashila Institution Policy Brief - Version 1.0

India’s R&D expenditure remains at approximately 0.7 per cent of GDP, compared to China’s 2.4 per cent and 3.5 per cent in the US. Research infrastructure gaps continue to widen compared to global benchmarks. Patent filings per million population stand at 35 for India versus 1500-plus for China and 2000-plus for the US. Trends in the global scientific landscape do not help either. The United States under President Trump has been cutting down on scientific funding while China has been reluctant to take the mantle of global scientific leadership. India can no longer bank on open global knowledge flows especially in domains where scientific progress directly translates into technological edge.

Inspired by the Special Economic Zones (SEZs), we propose the creation of Special Science Zones (SSZs) in India. The SSZs are envisioned as concentrated research and innovation hubs with special administrative and economic rules to accelerate India's scientific advancement. In order to establish them, we suggest the following modifications in existing regulations and laws:

1. Immigration

In order to attract the best talent globally, including Indian expatriate scientists, we propose the creation of a scientific visa category that enables scientists availing this visa type to stay in India for a duration of 10 years. We suggest the insertion of this new category in the rules to be framed under the recently passed Immigration and Foreigners Act, 2025 with following benefits:

1.1. Option to renew the visa after 10 years or conversion to Indian citizenship.

1.2. Immediate work authorisation without separate permits for the scientist and immediate family. Co-terminus long-term visa granted to family members/dependents.

1.3. Complete income tax exemption for the first three years (50 per cent reduction for years 4–10).

1.4. Access to national healthcare and education systems for visa holders and their dependents.

2. General Financial Rules

We echo the recommendations by RA Mashelkar, Ajay Shah and Susan Thomas (2024) of modifying the General Financial Rules which remain the bedrock of government contracting in the country. However, we narrow the scope of their recommendations to SSZs instead of country-wide application.

2.1. Since the SSZs would involve private players working in partnerships with government organisations, we suggest all forms of organisations located in SSZs be allowed to receive government grants under rule 230 of the GFR. This would enable even private manufacturers to be eligible for government grants for research and process innovation.

2.2. Rule 225 to be modified for application to SSZs such that cost-plus contracts are acceptable instead of avoidable. Organisations within the SSZs should be excluded from the purview of rule 144 (procurements of goods), 149 (government e-marketplace) and 201 (procurement of services).

3. Legislative and administrative

The parliament should debate and consider passing a Special Science Zones Bill modeled on the lines of Special Economic Zones Act 2005 to provide a legislative backing to following provisions:

3.1. Creating suitable exceptions for SSZ entities in Indian legislation dealing with income and corporate taxes as well as Foreign Contribution (Regulation) Act.

3.2. On the lines of SEZs, uniform removal or significant reduction of import tariffs on goods and services consumed by entities located within the SSZs.

3.3. Establishment of Autonomous Scientific Authority, an apex governing body for all SSZs composed of scientists, private sector and government representatives.

4. Miscellaneous

4.1. SSZs could initially focus on translational research domains that have commercial products and services as end goals. This will attract private sector participation. Once SSZs mature, basic science could be incorporated.

4.2. Creation and maintenance of better living conditions in addition to access to state-of-the-art labs and production facilities in the SSZs. If satisfactory living conditions cannot be created domestically, then we suggest exploring the possibility of establishing SSZs in partner countries with IP and revenue sharing.

Authors