Earlier, the State was almost the sole sponsor of the scientific research in the country. The agencies of the State involved in providing research grants restricted their clientele to the scientists located in public R&D institutions. Recently, the public funding bodies have begun to support the research efforts in private sector too. Innovative mechanisms like incubators, biotech parks are supported by the State funding agencies to encourage the industry-academia-public R&D networking. In 2003, the Department of Science and Technology (DST) and the University of Hyderabad organized a brainstorming session with the heads of all the public and private sector pharmaceutical R&D institutions. The DST officials informed the gathering that the Government of India would be allocating funds amounting to Rs. 159 crore annually towards promotion of collaboration between public and private R&D establishments and the aim of the workshop was to elicit the requirements of the pharmaceutical industry in the changing context of knowledge production. The biotechnology industry seemed to be interested in having a central facility for pilot scale production which could be shared by several units. Prior to 1990s, the industry in India did not seem to be interested in collaborating with the universities to find solutions to their problems, as the industry was able to import technology from other countries. The adaptation of imported technology to achieve the goals of import substitution also led to the enhancement of indigenous technological capabilities. The industrial R&D except in a few cases largely remained a tax saving device. In the changing context, the industry has to change its mind-set and start interacting with the academia to survive. The university system continues to remain in isolation. This isolation also meant that the universities pursued their teaching and research that was not oriented towards addressing the real world R&D problems of the Indian industry. Within the academic culture in the university system, there has been a greater emphasis on publications, as the publications counted for career advancement within the university system. In addition, the government has not been able to provide a sustained support to the universities. In the early 1990s, there was a policy move towards declaring higher education a non-merit good and hence did not have to be supported by the State. As a result, there was a paucity of funds for innovative research. Further, one notices in the university system a tension between a culture of creativity and a culture of conformity. It does not imply that there should be no norms to guide the organization of research; these rules have to be more enabling rather than constraining the endeavours of the university scientists. This is reflected in the way the research funds are managed. Though the universities claim that they are autonomous, the university bureaucracy tends to conform to the norms intended to be followed by a typical government department that is involved in the implementation of policies rather than in creative endeavours. In other words, emphasis on basic research, declining support for research that resulted in poor infrastructure and the rigid bureaucratic environment of the universities have become barriers for any creative linkages with the industry.