Why the bioeconomy bubble is inflated

THE Department of Biotechnology (DBT) recently released the tenth edition of its annual Indian Bioeconomy Report. While releasing the report, Minister of State for Science and Technology Jitendra Singh said that India's bio-economy has expanded from about $10 billion in 2014 to over $195 billion in 2025. This implies that the growth of biotechnology-based industries in India has been phenomenal over the past decade. This, according to DBT Secretary Rajesh Gokhale, is a result of progress made in building a vibrant biotechnology ecosystem in which DBT has played a central role.The report defines bio-economy as the economic activity derived from biological resources, including crops, forests, animals, fish and microorganisms, to produce food, feed, energy, materials and services. The report covers products, goods and services enabled by biotechnology and life science innovations in sectors like healthcare, agriculture, industrial manufacturing and energy. As per the report, the size of India's bio-economy in 2025 has reached about $195 billion, compared to $167 billion in 2024. The report creates the impression that India's bio-economy has surged at an unprecedented pace in the past decade due to biotechnology R&D and innovation catalysed by the DBT.However, the devil lies in the details. The figures have gone up dramatically because of a clever change in accounting and definitions rather than from the organic growth of the core biotechnology R&D alone.A massive portion of the growth in recent years is due to the inclusion of entire sub-sectors that were previously not counted fully or included only partially. In addition to biotech-based vaccines and pharmaceuticals, the figure covers the value of several other industrial products and services, ranging from beer and detergents to ethanol blending in fuel. In fact, about half of the $195-billion value comes from bio-industrial manufacturing — alcoholic beverages ($25 billion), animal feed ($23 billion), ethanol blending ($12 billion) and food and dairy ($8 billion). Biopharma, consisting of bio-therapeutics, medical devices, diagnostics and vaccines, is valued at $64 billion.The absurdity of bio-economy accounting is evident from the example of dairy products. Curd is produced through microbial fermentation, where lactic acid bacteria convert lactose in milk into lactic acid and help in coagulating casein proteins. The production of fermented dairy products represents the utilisation of biotechnology to add value and extend the shelf life of milk. So, in the context of the bioeconomy report, the humble curd is considered a biotechnology product or a bio-industrial product because its creation involves the fermentation of milk using starter cultures, which are living microorganisms.Another reason for the stellar rise in the bio-economy figure is the inclusion of yet another segment called bio-services, which adds $25 billion in value to the bio-economy. Again, these are not core R&D services, but are clinical studies and related services for pharmaceutical companies and outsourcing services for multinational life sciences firms.Hyderabad and Bangalore host about 150 global capability centres (GCCs) in life sciences. These units basically support different functions (research, regulatory, analytics, and enterprise) of their respective parent firms, which are pharmaceutical, biotechnology, and medical device companies. All the GCCs have been counted in the bio-economy report. Ironically, the same GCCs are also counted as part of technology outsourcing in the data released by Nasscom, an industry body for software services.The exercise of preparing the bio-economy report was initiated by the industry lobbying group, Association of Biotechnology-led Enterprises, in 2016 and subsequently adopted by the DBT, but the window-dressing of figures started three years ago. The definition of bio-economy was changed in 2023 to include the bio-industrial sector and the figures for the years 2020, 2021 and 2022 were revised with retrospective effect. These figures have been readjusted from $70 billion, $80 billion and $92 billion to $86 billion, $106 billion and $137 billion, respectively. Incidentally, the report gives these figures only in dollar terms, even though they do not denote exports.The DBT is a scientific department and is supposed to promote biotechnology R&D and its commercialisation efforts. But it is stretching the definition of bio-economy a bit too far to include even well-established commercial inputs in use for decades. For instance, the indigenous manufacturing of enzymes was started by Kiran Mazumdar Shaw almost a decade before the DBT came into existence in 1986. Industrial enzymes go into the making of alcoholic beverages, soaps and detergents, animal food, dairy products like curd and other probiotics, textiles, leather industry and so on. By focussing on already commercial use of industrial biotechnology in sectors where its R&D efforts have made little or no contribution, the DBT is dwarfing the importance of R&D-based vaccines and biopharmaceutical manufacturing, where it has made a substantial contribution.The high headline figures mask underlying weaknesses that suggest the biotechnology sector is less mature than the numbers imply. The largest contribution, nearly half of the total 2025 figure, comes from the bio-industrial segment, which is heavily driven by ethanol blending in fuel. Clearly, the high growth rate is powered by changes in government policy rather than breakthrough or new biotechnology-based innovation.While enzyme-based industries and medical device segments have been included to inflate the bioeconomy figure, a bulk of enzymes, as well as medical devices used in the country, are imported. A large chunk of the growth is in bio-services, which is essentially contract work for foreign firms rather than domestic intellectual property (IP) creation.Meanwhile, China is racing ahead in biotechnology. Its biotechnology sector (not bioeconomy) is worth over $300 billion with over 70 biotech unicorns. China has a functional network of bio-foundries, while the foundation stone for India's first bio-foundry centre was laid at the National Agri-Food and Biomanufacturing Institute (NABI) in Mohali only last month. It is time for the DBT to publish a report on India's biotechnology R&D and innovation sector, its commercialisation and the gap between R&D and markets, rather than hide behind industry-collated bioeconomy data.

Why the bioeconomy bubble is inflated

The high growth rate is powered by changes in government policy rather than breakthrough or biotechnology-based innovation.

Dinesh C Sharma

Why the bioeconomy bubble is inflated

The high growth rate is powered by changes in government policy rather than breakthrough or biotechnology-based innovation.

Dinesh C Sharma

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