Stock repurchases, innovation, and the green transition in India: Evidence from listed firms, R&D spending, and low-carbon technologies

Abstract

This paper examines whether share repurchases affect innovation activity in India, with special attention to green and low-carbon technologies. Share buybacks have become a significant and growing payout tool for Indian listed firms — between 1999 and 2022, Indian listed companies made over 1,661 buyback announcements, with the structural mix increasingly shifting toward tender offers. Yet their growing use raises a fundamental question: do they support capital efficiency, or do they reduce the resources available for long-term innovation? Drawing on published data on Indian listed companies, SEBI buyback disclosures, R&D expenditure trends, and green patent statistics, this paper develops a conceptual framework proposing that heavier repurchase activity is negatively associated with future R&D spending and patenting activity — especially green and low-carbon patents. India's corporate R&D intensity stands at only 0.3% of net sales, significantly below global peers, while green patent filings are rising rapidly, making this intersection especially relevant. The paper further argues that ESG performance and governance quality moderate this relationship, with higher-ESG firms better able to protect innovation budgets during buyback periods. The paper offers an India-specific conceptual model, evidence-based analysis, and policy recommendations for boards, investors, and regulators.