Bio-economy-Led Structural Transformation in India’s Laggard States: Innovation, Regional Heterogeneity, and E3 Outcome

Abstract

The transition towards a bioeconomy is increasingly regarded as a strategic pathway for integrating economic transformation, environmental sustainability, and employment generation, yet its developmental effects remain highly uneven across regions. This study examines regional heterogeneity in India’s bioeconomy transition and its implications for integrated Economy–Environment–Employment (E3) outcomes using a comparative state-level framework covering innovation-intensive states—Karnataka, Maharashtra, Tamil Nadu, Gujarat, and Telangana—and structurally lagging states—Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, and Jharkhand. The analysis integrates multi-regional input–output modelling, environmentally extended input–output accounting, structural decomposition analysis, and dynamic scenario simulation to 2050, complemented by econometric estimation of the principal determinants of regional variation. The results reveal a dual-speed transition in which bioeconomy activities remain concentrated in regions with stronger innovation ecosystems, infrastructure, human capital, and institutional capabilities, while diffusion towards structurally constrained states remains gradual. The evidence indicates relative convergence in economic and employment outcomes but persistent disparities in environmental performance and skill intensity. Innovation capacity, infrastructure, human capital, and institutional quality emerge as critical determinants of regional bioeconomy performance. Scenario analysis indicates that an accelerated and inclusive BioE3 pathway, supported by distributed innovation systems, circular production models, targeted infrastructure investment, and regionally differentiated capability development, could strengthen the participation of lagging states in higher-value bioeconomy activities and improve E3 outcomes by 2050. The study contributes to the emerging literature by integrating bioeconomy transition analysis with regional innovation systems, structural transformation, and spatially differentiated E3 assessment, demonstrating that biological-resource endowment alone is insufficient to ensure inclusive transformation. The findings underscore the need for place-based strategies that build regional capabilities and enable a more sustainable, employment-intensive, and spatially balanced Indian bioeconomy transition.