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Few years back an Indian mobile manufacturer was not even heard of, and today indigenous brands like Micromax and Karbon are steadily eating into profits of established global brands like Samsung Electronics and Apple Inc.
And not too long ago, the world’s cheapest car — Tata Nano’s launch in 2009 awed experts and carmakers across the world and bagged accolades for innovation.
These brands are an example of how India is gradually progressing in R&D and innovation,and that is not it.
From being a destination for IT and business process outsourcing, India is now fast moving to become a major center for cutting-edge research and development (R&D) projects of global multinationals as well as local firms. The overall R&D expenditure in India has doubled since 2007 and is estimated to be around USD 40 billion in 2012.
American multinational Dell recently inaugurated a new state-of-the-art Firmware Lab at its R&D centre in India’s southern Bangalore city. The new lab is the only Firmware Lab to be established outside the company headquarters in Austin.
Highlighting upon India’s R&D potential, Rudramuni B, Executive Director and Head, Dell India R&D, says, “Dell envisions India as a critical R&D and innovation hub for Dell’s global eco-system. With the inauguration of the new lab, Dell India will look to further augment its R&D capabilities. Our investment in this facility bears testimony to the highquality talent available in India.”
Also, Suzuki Motor Corporation (SMC) recently announced plans to establish an integrated research & development (R&D) centre in Rohtak, Haryana. The testing facility and the R&D Centre at Rohtak are expected to become operational within two-three years and it will help in the design, development and testing of new vehicles for the company’s African, West Asian and some South Asian markets.
More and more companies in industries ranging from IT and telecom, pharmaceuticals and biotech are taking up ambitious R&D projects, aiming to serve the Indian market, and also eyeing a piece of the global pie by innovating.
Dr A Didar Singh, Secretary General, FICCI, says, “India is fast emerging as a major force in the global research and development arena. A considerably large talent pool across diverse areas of science, technology and management, along with robust academic and research infrastructure and a progressive policy environment is spurring a lot of basic and industrial R&D activity in the country and increasingly making it a top choice among global corporations for off-shoring their R&D needs.”
IndiAdvantage
Multinational companies have been setting up their R&D units in India since 1980’s. According to the data compiled by Federation of Indian Chambers of Commerce and Industry (FICCI), currently over 800 multi-national companies are having one or more of their R&D centers based out of India. Most of these centers have steadily increased their capacity and headcount over the last few years.
And most companies have continued to show interest in India for their research and product development needs despite its low 2013 Global Innovation Index (GII) rankings.
Indian students are also waking up to the potential lying in the field of research and are ditching fat pay checks of corporate jobs to pursue their quest for knowledge, thereby adding to the pool of skilled talent. “Skilled workforce refers to people who have done their Masters or PhDs. Good news is that in Engineering and Technology sector the IITs, ISCs are increasing their PhD output dramatically in the last five years from 100 PhDs per IIT five to six years ago to about 200 PhDs per year now. It will go up to 400 four years from now,” informs Professor Bhaskar Ramamurthi, Director, IIT Madras.
Prime Minister Manmohan Singh
on Industry-Academia collaboration in R&D
“This would be of mutual benefit to both- to the corporate sector it would mean cost effective solutions and newer technology while for the IITs it would bring much needed funds and enhance their research capabilities,“
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Key factors fuelling R&D in India: |
| >> Large and Developing Market:India’s young population and burgeoning middle class with their ability to spend money and aspirations to acquire new products have created a large market that both Indian and foreign companies are lookingto tap into >> Huge Talent Pool: India has alarge scientific pool available for companies to employ for their research activities. With over 1.2 million students, there is also no dearth of young talent whichcan be trained by companies for research >> Reduced R&D costs: As compared to the western countries,India provides the opportunityto lower the R&D costs, whichis an attractive reason for manymulti-nationals to outsourceprojects to the country >> Strengthening intellectual property regime: Patenting,which is an important measureof innovative R&D activity, is onthe rise in India. Patent registrationsn the US from India grewfrom 94 in the year 2000 to 465 in 2010, and registrations in Europe increased from 7 in the year 2000 to 200 in 2010>>Other factors: Fluency in English language and a strong judicial framework are other keyfactors that are driving researchand development |
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Apart from the corporate biggies, India is also attracting large number of international universities that are partnering with several Indian universities or institutes to carry out joint research in various fields. For example, Deakin University, Australia is already working on 20 tie-ups with Indian Institutions including The Energy and Resources Institute (TERI) with which they run a joint- Biotechnology Centre. It is looking to expand these partnerships in future with premier institutes like the IITs for various joint projects and student exchange programmes.
Peter Hodgson, Professor, Deakin University, Australia, says,
“I think India has got fantastic potential with its large human resource capacity. People prefer to invest in India than China because their intellectual property is much more secure in India and language is much easier. I also think there is more trust between western nations and India than probably China. The education system here is very much similar to the Western education systems. So there is a lot of common understanding. We are looking at expand partnerships in three areas — biotechnology, nano-technology and anufacturing.”
Better Policies
Till now, the overall government and industrial spending in scientific and technological R&D has remained below 1% of total GDP for more than a decade. The government spending accounts for over three-fourths of the Gross Expenditure for Research & Development (GERD), followed by 20-25 percent spent by private sector and 5 percent by universities as shown in the graph.
According to the data provided by the Science and Technology Ministry around 500 Indian scientists working abroad have come back in the last seven years, thanks to better research opportunities and their passion to do something for their native country. The majority of the reverse brain drain has happened from the US, Germany and Britain.
Credit must be given to the several schemes run by the Indian government like the Indian The Ramanujan Fellowship, Innovation in Science Pursuit for Inspired Research (INSPIRE) Programme and the Ramalingaswamy Fellowship.
Under the 12th Five-Year Plan (2012-17) the government is also looking to expand the base of human capacity for research by offering 1000 overseas doctoral and 250 post-doctoral fellowships supported by assured career opportunity.
Highlighting steps undertaken by the government, Dr Shashi Tharoor,Minister of State for Human Resource Development, explains, “The government is striving hard to create the best possible R&D structure. The 12th Five- Year Plan seeks to create an ecosystem, which will contribute to create industrial R&D share in the national R&D expenditure, creating indigenous capacities to attract and absorb FDI, raising manufacturing industries’ contribution to 25 percent of GDP, and raising technology in the value added exports from our country.”
He further adds, “The Plan’s chief focus will be to motivate and support innovation, micro, small and medium enterprises and creating a cluster of such enterprises which will be able to contribute on our national economy. The government aims to establish 10 privately-operated industrial R&D centres dedicated for micro and small industries. Public-private partnership will be emphasised, which will create elaborate research between industries and the universities and public-funded research institutions.”
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The 12th Five-Year Plan seeks to create an ecosystem, which will contribute to create industrial R&D share in the national R&D expenditure, creating indigenous capacities to attract and absorb FDI” |
 Peter Hodgson, Professor,Deakin University
“There is more trust between western nations and India than probably China. The education system here is very much similar to the Western education systems. So there is a lot of common understanding. We are looking at expand partnerships in three areas — biotechnology, nano-technology and manufacturing,” |
Government is contemplating on increasing the investment in R&D in public and 20 private sector to two percent of GDP via the following measures:
• Higher allocation to scientific research
• Setting up of new institutions for science and educational research
• Creation of centres of excellence and facilities in emerging and frontline areas in academic and national institutes
• Strengthening infrastructure for R&D in universities
• Encouraging public-private R&D partnerships
• Increasing grants for industrial R&D projects.
| Industrial R&D spending in India – 2010 | ||
| Company | R&D Spend (USD million) | R&D Spend (% Revenue) |
 Tata Motors |
397.8 | 1.50 % |
 Prithvi Information |
246.3 | 60.50 % |
 Polaris Software |
228.0 | 67.60 % |
 BHEL |
176.3 | 2.50 % |
 Mahindra & Mahindra |
157.2 | 2.50 % |
 Lupin |
112.7 | 9.30 % |
 Infosys |
112.0 | 1.90 % |
 Reliance Industries |
110.0 | 0.20 % |
 Bharat Electronics |
67.2 | 5.90 % |
Stumbling Blocks
Need for higher Government Spending on R&D: The government should increase funding to research and development projects. As per data provided by FICCI, India’s R&D expenditure is merely 2.1 percent of the total global expenditure in R&D in comparison to US where R&D spending accounts for about a third of the global R&D spends (33.6 percent) and, Japan and China account for 12.6 percent each. Increasing thrust from the government, especially, in terms of doubling public R&D spend from the current level of just under one percent to a projected two percent of GDP over next five to ten years.
Increasing Private Sector Spending on R&D: India’s private sector investment in R&D is less than 25 per cent of overall spend. While the cumulative domestic R&D output and investment in India has shown a healthy growth trend over the years, but boosting domestic private sector investment continues to be a challenge.
Lack of Skilled Human Resource: While the sheer numbers of India’s talent force favour outsourcing R&D to India, but bridging gaps in skills remains to be a tough task. India must continue to emphasise the development of high quality scientific and technological skills.
Poor R&D Infrastructure: According to a McKinsey report commissioned by the USA-India Chamber of Commerce, problems like poor policy and infrastructure still cloud the R&D growth in the country especially in the Indian healthcare sector.
Quality Research: There is a greater need to increase quality research in science and technology. There are also concerns about none of the Indian universities making it to the top 200 universities globally because of lack of or substandard research. Research (in terms of volume, income and reputation) accounts to 30 percent of the total evaluation. Recently, the Ministry of Human Resource Development (MHRD) has urged universities to put more money into research.
Bridging the Industry-Academia- Public Gap: At present, the R&D ecosystem is segmented with a lack of lab linkage between industry-academia public that is leading to low competitiveness. There is a need for open collaboration between all R&D stakeholders. The government should facilitate exchange programme between researchers and academia and public to create better synergy in public-private.
Need for Applied R&D: Recently, Prime Minister Manmohan Singh emphasised the need for private sector participation in scientific research and also urged the scientific community to ensure that the research is converted to technology or products that will boost India’s development goals.
For long, India has enjoyed a vast and strong intellectual tradition yet it has lagged behind countries like Russia and China in terms of R&D. It can build upon its academic lineage with further innovation and research. As government and private investment increases in higher education, science and technology the future of R&D in India is bright. Through path breaking R&D, India has the potential to realise its dream of becoming a knowledge economy.
