Beyond Kotak's Wake-Up Call: Why India Inc Needs Scale, Infrastructure, and Smart Capital — Not Just More R&D

Uday Kotak's June 2, 2026 post on X was characteristically blunt. The veteran banker pointed to Alphabet's decision to raise an additional $80 billion in fresh capital — despite sitting on $160 billion in annual profit, $62 billion in the last quarter alone, and a $4.5 trillion market capitalisation — and held it up as a mirror to India Inc. The contrast with the collective profits and market cap of all Indian listed companies was uncomfortable. His call: set aside the IPL distraction and get back to the "business of business."

The post went viral quickly. Supporters praised the call for greater ambition and risk-taking. Critics pushed back, pointing to regulatory hurdles, tax uncertainties, high compliance costs, and a broader risk-averse culture in Indian business. The debate was healthy and timely. Yet, while Kotak's diagnosis of an ambition and execution gap is largely correct — particularly in innovation intensity — the path forward demands more nuance than a simple "invest more" imperative.

India's journey toward global competitiveness, especially in the deep-tech and AI era, requires disciplined sequencing: aggressive capacity expansion by conglomerates as the immediate foundation, followed by translational infrastructure, patient domestic capital deployment, and—crucially—tight integration between public and private R&D ecosystems. Chasing R&D spending percentages in isolation risks becoming a distraction from what India actually needs at this stage of development.

The Diagnosis: The Ambition Gap is Real

Recent data validates Kotak's core concern. According to a BusinessLine report, published on 9 May, in Q4 FY26, India Inc delivered solid aggregate performance — adjusted PAT grew around 15-18% year-on-year, with revenue growth reaching its fastest pace in several quarters. Cyclical sectors like Capital Goods, Automobiles, Power, and Metals led the charge. The IT-Software sector, however, remained a notable laggard, posting modest single-digit growth. Excluding BFSI, Q4 PAT growth hit approximately 18%, but Capital Goods alone posted near 65-70% PAT expansion, while IT-Software, Banks, and Refineries trailed significantly.

The innovation intensity gap is even more telling within IT services. According to another BusinessLine report, published on 1 June, Indian IT majors modestly increased R&D spending in FY26: Infosys raised it to ₹1,093 crore (0.73% of revenue, up from 0.62%), while TCS spent ₹2,900 crore consolidated (1.1% of turnover, up from 1.0%). These are steps in the right direction, but they remain far behind global peers — Microsoft spends around 12-13% of revenue on R&D, and even Accenture, not a frontier research firm, invests proportionally far more. 

What these numbers reflect is not mere parsimony but a structural orientation: a services-heavy model still built on execution and labour arbitrage rather than proprietary IP, full-stack ownership, or platform leverage. Kotak's instinct about the "safe sector" bias is, on this evidence, well-founded.

The Nuance: What the Headlines Miss

Kotak's alarm is justified. But a fuller picture reveals encouraging undercurrents that a pure "ambition deficit" narrative risks obscuring.

At India's current stage — marked by infrastructure deficits, a massive demographic dividend, and the urgent need for job-creating industrialisation — scale and capacity building remain the primary growth engines. Conglomerates are responding with serious commitments. The Adani Group executed a record ₹1.53 lakh crore ($16.1 billion) in capital expenditure in FY26, the highest annual capex by any Indian corporate group in history, with its asset base crossing ₹7.85 lakh crore. Other conglomerates like Reliance, Tata, JSW, Aditya Birla, AM, and leading CPSUs continue multi-lakh crore pipelines, each, across mining, refining, steel, cement, aluminium, zinc, renewables, manufacturing, data centres, etc. 

This is not glamorous deep-tech spending, but it builds the foundational muscle — power plants, ports, roads, airports, mines, refineries, factories, and supply chains — without which high-value innovation cannot achieve commercial scale. The sequencing here matters more than it is usually given credit for. South Korea and Taiwan both achieved manufacturing dominance and economies of scale before pushing frontier R&D; they did not pursue both simultaneously at the same intensity. Obsessing over GERD-to-GDP ratios (India's is at around 0.7%) before physical capacity gaps are closed risks misallocating both capital and political attention.

Domestic Capital and Deep-Tech Momentum is Building

Parallel to legacy capex, a quieter but accelerating domestic venture ecosystem is taking shape. Deep-tech funding has shown resilience and growth: the sector attracted $1.6-2.3 billion in 2025, with early 2026 already seeing strong flows of around $700-967 million in the first few months. The composition of this capital is as important as its volume. Domestic LPs, founder-turned-investors — Girish Mathrubootham's Together Fund, Zoho's strategic bets — family offices, and alumni-led initiatives from IITs and IIMs are leading early-stage and thematic funds focused on AI, semiconductors, climate, and robotics. This represents a generational shift: capital that understands the domain, tolerates long gestation periods, and is not subject to the return-horizon pressures of foreign institutional money.

The government is also contributing substantially: a $1.1 billion deep-tech fund-of-funds approved earlier in 2026, the ₹1 trillion RDI scheme, extensions of startup recognition for deep-tech firms to 20 years, and programs like Bharat Innovates. These are not marginal interventions — they are beginning to structurally reduce India's dependence on foreign capital for its most strategic bets.

The Critical Missing Link: Translational Infrastructure

Funding and design talent together are necessary but not sufficient. India has demonstrated genuine strength in chip design — the C2S program has trained thousands of engineers, and a design talent pipeline is visibly forming. The weakness is in what comes next: prototyping, fabrication, and scale-up. The gap between a working design and a commercially manufacturable product is where Indian deep-tech ambitions most frequently stall.

The ₹4,500 crore upgrade of the Semiconductor Laboratory (SCL) at Mohali is the most important institutional model India currently has — not because of its scale, but because of its logic: end-to-end capability from design to prototyping to testing within a national ecosystem. What India now needs is to replicate this logic across domains — advanced chemistry, advanced materials, semiconductors, upstream components, biomanufacturing, etc. Without these translational bridges, promising R&D outputs remain confined to labs and pilot projects, never achieving the commercial or strategic scale that makes them count.

The Way Forward: A Pragmatic Roadmap

For Corporates and Family Offices/Funds 

Legacy players and next-generation leaders need to move beyond incremental R&D toward bolder, full-stack bets with longer time horizons. The opportunity is not simply to spend more, but to redeploy patient capital into projects that carry genuine technology risk — advanced manufacturing, deep-tech platforms, and proprietary IP development. Hybrid models — conglomerates partnering with or incubating startups — are an underutilised mechanism for doing this without abandoning capital discipline. Family offices, in particular, occupy a structurally advantageous position: they can absorb the long gestation and ambiguity that traditional VCs avoid, precisely because their mandate is not defined by fund cycles.

For the Central Government

Upcoming budgets and policies need to hold two priorities in tension simultaneously: sustaining the private capex cycle through regulatory stability and genuine ease-of-doing-business reform, while accelerating the rollout of national prototyping and scale-up infrastructure. SCL Mohali's blueprint should be the template, not the exception. The institutional architecture for translational R&D needs to be treated as infrastructure — not as a programme to be funded in annual budget lines.

For the R&D Community 

Perhaps the most structurally important challenge is one that receives the least policy attention: the near-complete separation between public R&D institutions and corporate or philanthropic R&D efforts. Both are growing. But they are growing on parallel tracks — public institutions focusing on foundational or strategic research, private efforts chasing near-term commercial applications — with little mechanism connecting the two. The result is that national capability accumulates in silos rather than compounds.

Practical mechanisms for integration exist and have proven precedents: joint mission-mode projects with co-funded applied research mandates, shared access to national labs under clear IP frameworks, talent exchange programs between CSIR labs and industry labs, co-development platforms for dual-use technologies, and aligned outcome metrics that reward commercial translation rather than only publications or patents. Philanthropic capital — increasingly available from India's wealth creation wave — can serve as an effective bridge between public missions and private execution agility. The integrated ecosystem models of Taiwan's ITRI and South Korea's ETRI did not emerge organically; they were architected. India needs to consciously architect its own version.

For Consultancies and Media 

The metrics of success need to be reoriented. R&D spend as a percentage of GDP or revenue is a proxy; it is not an outcome. What India needs to track and reward are commercial scale, exports generated by domestically developed technology, IP ownership, quality job creation in technology-intensive roles, and strategic self-reliance in critical sectors. These outcomes require conglomerates, startups, academia, and government to collaborate on shared infrastructure and application environments — not merely to announce intentions at media conclaves.

Conclusion: Optimism Grounded in Realism

India Inc is not standing still. A meaningful private capex cycle is underway. Domestic deep-tech funding is maturing with genuine policy support. Pockets of bold execution exist across legacy groups and founder-led ventures alike. Q4 FY26's cyclical strength and Adani's record investments are not cosmetic — they represent real capacity being added to a real economy.

Kotak's post is a valuable provocation. It should spark urgency, not despair. But the urgency needs to be directed precisely. The real opportunity lies in leveraging India's distinctive structural advantages — a massive domestic market capable of providing the scale that makes innovation economically viable, a vast and increasingly well-trained talent pool, growing domestic capital with longer horizons, and democratic institutions capable of enabling patient, strategic bets when they choose to.

The IPL is over. The real game is building enduring institutions and capabilities — through disciplined sequencing of capacity, infrastructure, smart capital, and collaborative R&D — that outlast any single earnings season or global headline. India has the ingredients. What it has historically underinvested in is the connective tissue between them: the translational layer, the institutional bridge, the middle infrastructure that turns isolated strengths into compounded national capability. That is the orchestration challenge Kotak's wake-up call should actually provoke.