There is huge scope for growth of biotechnology sector in India. R&D spending by drug firms has been increasing and it can grow at 12% p.a. in future. Traditional mindset of the financer i.e., to lend against collateral, inability of biotechnologist in presenting the project clearly to the financial sector, lax patent rules, and infancy stage of the sector are some of the problems faced by bankers to finance this sector. Bankers can use some innovative methods of financing like lending against patents, manpower valuation, Escrows account etc., to finance this sector.

Biotechnology is the use of whole or parts of organisms, such as cells, genetic materials or enzymes, to make or modify products, to improve valuable traits in plants or animals, or to develop organisms for specific applications. It also encompasses research and development of natural products from organisms for agricultural, biomedical and industrials uses. Biotechnology is a very wide field that offers particularly promising opportunities for both developing and developed countries. The important issue here, is the use of living matter or organic tissue in some form to develop a product with the use of technology.

At the outset, we need to understand that biotech is an unstructured process and in this respect, it is quite different from computer software, telecom and the other service industries. Biotech also involves more scientific expertise. Bioresearch deals with a natural organic process, which cannot be sequenced in a mechanical manner.

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