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Research And Development

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Research and Development

December, 2011

Introduction

After proving its mettle in the fields of information technology (IT) and business process outsourcing (BPO), India is making its way as a major center for cutting-edge research and development (R&D). Multinationals like Microsoft and Motorola, along with their Indian counterparts, are keen to launch their R&D and technology-based projects here due to the presence of world class institutions, a robust intellectual property regime and a rich talent pool of technical manpower available at a very competitive cost. Companies across the industries, ranging from IT and telecommunications through pharmaceuticals and biotech, are not only preparing themselves to serve the Indian market, but are also focussing their efforts to deliver new generation products (researched and developed in India) to the global market.

Indian R&D sector keeps evolving every day with developments and innovations. Some of the recent ones are discussed hereafter.

Indian R&D Sector Makes Mark Globally

Countries across the globe are recognising India as a strategic partner in R&D efforts and technological advancement. Given below are some facts to support the same-

  • The US and India have shared very fruitful partnerships in the recent past. US firms find India as a great market for investment in the R&D of pharmaceuticals, high tech, biotech and green tech, and IT infrastructure, among others.
  • Huawei, the Chinese ICT (information and communications technology) firm has a 3,000 member strong R&D team in India, which, the company wants to strengthen further. The company already supplies products and solutions (designed by its Indian R&D team) globally and intends to enhance it increasingly.
  • According to annual R&D Scorecard of the companies from across the world prepared by the European Commission, automobile giant Tata Motors is India’s top ranked company for R&D, followed by IT firms Prithvi Information Solutions and Polaris Software, state-run BHEL and another auto giant Mahindra & Mahindra in the top-five.

R&D- Key developments and Investments

In order to expand its sales and R&D activities in India, digital optical networking company Infineria has stated that it will plough back 23-24 per cent of its revenues in R&D operations. The company’s products are used by large telecom carriers and it has around 10 per cent market share in India majorly through Reliance ADA.

  • Professional networking company LinkedIn has recently set up a technology and R&D center in Bengaluru. Planning to expand its operations in India, LinkedIn would employ about 35 engineers in the facility by the end of 2011 and the center would build and operate the company's core products and applications.
  • Indian consumer durables firm Videocon has stated that it would invest around Rs 50-60 crore (US$ 9.46-11.36 million) in R&D in 2012 as the company is planning to come up with entirely new range of products in almost every segment.
  • US-based industrial gas company Praxair would entail an investment of about Rs 1,200 crore (US$ 227.14 million) by 2013-14 on its Indian operations wherein it would also set up a new R&D lab in Bengaluru. The new facility, which would be set up for various customer industries, such as metal fabrication, steel and water treatment, would also act as a global hub for the entire pharmaceutical industry.
  • As a part of its ‘university connect’ initiative, IBM India is collaborating efforts with IIT Guwahati for research on solutions for the differently-abled, wherein the company will contribute for project that would focus on people who face hearing and speech problems. The project would develop software-based solutions that will be able to evaluate the sound pronounced by the user, compare it with the target sound, and provide appropriate feedback.

Government Initiatives

Mr Ashwani Kumar, Minister of State for Science & Technology has recently stated that the Government is keen on involving private sector in a significant way in R&D sector, especially in the fields of vaccines, drugs and pharmaceuticals, super computing, solar energy and electronic hardware. A public-private partnership (PPP) fund of Rs 5,000 crore (US$ 946.43 million) has been set up for the same which would also promote commercialisation of products and services.

Giving an impetus to domestic R&D is on top-priority list for Dr Manmohan Singh, Prime Minsiter of Indiaas well. While inaugurating India Telecom Summit 2011, he insisted that considering the growth potential for the manufacturing of telecom equipment in India, there is an urgent need to boost R&D and manufacturing in the telecom sector, for which the private sector should also lend support.

Furthermore, to attract more of young talent towards scientific research, the Ministry of Human Resource Development (MHRD) and the University Grants Commission (UGC) have formed a committee that would launch a scheme on research start-up grant for newly-recruited faculty at the assistant professor level in universities.

Road Ahead

According to a study by NASSCOM, India ranks first in the global Engineering Research and Development and Design (ER&D) outsourcing industry with a 22 per cent share in the revenue and the market for such services is estimated to touch US$ 40-US$ 45 billion by 2020. The study further revealed that ER&D currently contributes 15 per cent of the US$ 60 billion-strong Indian IT-BPO export industry wherein over 400 service providers generate revenue of about US$ 9-US$ 10 billion. During FY2011, Indian ER&D centres made cost savings of over US$ 20 billion.

Engineering design in auto sector has been happening for a long time in India. Medical electronics, consumer electronics, telecom and energy are upcoming sectors in this field. Keeping in view such progress made by Indian ER&D sector, experts believe that India will emerge as a researcher and service provider in a big way with greater domain capabilities and establish itself as a leader in the ER&D space in the years to come.

Exchange Rate used: INR 1 = US$ 0.0189 as on December 12, 2011

References: Media Reports, Press Releases, Wharton School