Research and Development
India is presently ranked 76th among a total of 143 economies, as per the Global Innovation Index (GII).

Research and Development in India

Latest update: September, 2015

Government spending on education in India


•In Budget 2015, the Government of India allocated US$ 23.6 billion for the education sector compared to US$ 22.8 billion in the previous budget  

• US$ 11.3 billion has been allocated for general education while US$ 4.7 billion has been allocated for Sarva Siksha Abhiyan  

•Since FY2007-08, allocation for education has increased over 2-fold  

Domestic market share of Indian auto component industry

Tremendous growth of Global In-House centres


•Global In-House Centres (GIC) are one of the major growth drivers of the IT-BPM sector in India.

• In 2012, there were more than 760 GICs operating out of India, across multiple locations accounting for USD13.9 billion of export revenues, almost 21 per cent of the industry export revenues, and employing 20 per cent of the total manpower

•The impact of the segment goes beyond revenue and employment, as it helped in developing India as a R&D hub and create an innovation ecosystem in the country

Auto components sector contribution to GDP


Last Updated: September, 2015



The research ecosystem in India presents a significant opportunity for multinational corporations across the world due to its intellectual capital available in the country. Legions of Indian engineers working across the globe highlight the highly trained manpower available at competitive costs. Consequently, several MNCs have shifted or are shifting their research and development (R&D) base to India. These R&D bases either develop products to serve the local market or help the parent company overseas deliver new innovative generation of products faster to the markets across the world.

Market Size

According to a report released by Zinnov Management Consulting, “Global R&D Service Providers (GSPR) Rating 2014”, India’s R&D globalisation and services market is set to double by 2020 to US$ 38 billion.

The study estimates the overall addressable R&D globalisation and services opportunity at US$ 170 billion as of 2014. Currently only US$ 55 billion of this opportunity is addressed globally. India’s share of the addressed market is estimated at 33 per cent or approximately US$ 18 billion with in-house R&D centers contributing US$ 11.3 billion worth of research services to their parent companies.

The global outsourced engineering services market currently stands at US$ 26 billion with players from US, Europe and India having an almost equal share. More importantly, Indian service providers lead the list amongst the global service providers. As of 2014, the Indian service providers delivered US$ 6.9 billion worth of services, or 27 per cent of the addressed outsourced services market. The study estimates that by 2020, the Indian outsourced Engineering R&D services market will reach US$ 15 billion growing at a Compound Annual Growth Rate (CAGR) of 13 per cent. This growth is expected to be primarily driven by catering to the increasing demand for embedded systems and software needs across all verticals.

Recent Investments

  • Chinese telecom gear maker Huawei has launched a Research and Development (R&D) campus in Bengaluru with an investment of US$ 170 million. The campus, the first by any Chinese company, has a capacity to accommodate 5,000 engineers and is the largest R&D centre of Huawei outside China. At present 2,700 people are working here, with 98 per cent being local workers.
  • Kellogg plans to set up its R&D centre in India in 2015. Besides developing products specifically for India, Kellogg aim to make its India R&D unit a lead centre for creating products for other emerging markets where Kellogg is present.
  • Chinese smartphone maker Xiaomi has signed the lease for its R&D centre in Bengaluru, which is expected to be launched later in 2015. Xiaomi has leased a 20,000 square feet building space for their R&D centre in Cessna Business Park in Bengaluru.
  • American chipmaker Broadcom is betting big on developing solutions tailored to India and other emerging nations from its Bengaluru R&D unit. The key opportunities focused on are in the areas of Internet of Things and wearables market in India. Out of Broadcom’s global headcount of about 11,000 people, the India R&D centre has about 1,500 people.
  • Dell is looking towards strengthening its engineering team in India and increasing the number of patent applications filed from India. The country has already become the largest contributor to software patents for Dell.
  • Specialty chemicals maker BASF SE is setting up an innovation campus in Navi Mumbai at a total investment of Rs 360 crore (US$ 54 million). The innovation campus is in addition to the R&D centers in Mumbai and Navi Mumbai.
  • Twitter Inc is planning to set up its first facility outside the US in the form of an R&D centre in Bengaluru to grow faster and accelerate user adoption in emerging markets. Twitter plans to use Bengaluru-based mobile marketing and analytics company ZipDial Mobile Solutions Pvt. Ltd’s team to build this new R&D facility.
  • French three-dimensional design software firm Dassault Systemes has decided to extend its 'Living Heart' research initiative to India, a move that will give surgeons in India’s top cardiac institutes, access to the company's 3D heart simulation platform.
  • California based Cohesity, a start-up involved in secondary storage space, has recently launched operations in India and is expected to invest US$ 10 million in the country over the next two years in research and development.
  • Sequoia Capital will invest US$ 120 million in Bengaluru’s MedGenome, a genomics based diagnositcs and research firm that uses DNA sequencing and data analytics to conduct genetic testing for cancer and other rare diseases.

Government Initiatives

The Government of India has taken several steps to promote the R&D sector in India. In the Union Budget 2015-16, the government announced plans to establish National Institution to Transforming India (NITI) to increase involvement of entrepreneurs, researchers to foster scientific innovations.

India’s steel minister Mr Narendra Singh Tomar has announced creating a fund of Rs 100 crore (US$ 15 million) to help setting up R&D units with the participation from industries and the government to overcome the technological gaps. Mr Tomar said “It is under the active consideration of the government to infuse more funds in this initiative to utilise locally available cheap raw material, to remain competitive in the world market.

Road Ahead

With the government’s support, the R&D sector in India is all set to witness some robust growth in the coming years. According to a study by management consulting firm Zinnov, engineering R&D market in India is estimated to grow at a CAGR of 14 per cent to reach US$ 42 billion by 2020.

India is also expected to witness strong growth in its agriculture and pharmaceutical sectors as the government is investing large sums to set up dedicated research centres for R&D in these sectors. The Indian IT industry is also expected to add to the development of the R&D sector.

Exchange Rate used: INR 1 = US$ 0.015 as on September 14, 2015

References: Media Reports, Press Information Bureau (PIB), Innovation Council of India, Union Budget 2015-16, Department of Industrial Policy and Promotion (DIPP)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


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