Last Updated: January 29, 2015
J S Shin
CEO and President, South West Asia, Samsung
Updated: December, 2014
INNOVATION AND PATENTS SECTOR REPORT | October, 2014
Research and development (R&D) forms the basis of future competitiveness of any country, as it’s critical for innovation, and India is no exception. The research ecosystem in India presents a significant opportunity for multinational corporations across the globe on the back of its highly talented engineers at competitive costs. The setting up of an R&D base by an increasing number of MNCs is a testimony to this fact. These R&D establishments either serve the local market or help the parent company deliver new generation of products faster to the global market.
According to a recently released report 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 33 per cent with in-house R&D centers contributing US$ 11.3 billion worth of 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. Significantly, Indian service providers lead the list amongst the global service providers. As of 2014, the Indian service providers deliver US$ 6.9 billion worth of services which is 27 per cent of the addressed outsourced services market. The study estimates that by 2020 the Indian outsourced ER&D services market will reach US$ 15 billion growing at a CAGR of 13 per cent. This growth will be primarily driven by addressing the increasing demand for embedded systems and software needs across all verticals.
The Government of India has taken several steps to promote the R&D sector in India. In the recently released Union Budget 2014-15, it established two more Agricultural Research Institutes of excellence in Assam and Jharkhand with an initial sum of Rs 100 crore (US$ 16.33 million). It also plans to set up a national level research and referral institute for higher dental studies and 15 model rural health research centres.
"Innovation and research will play an important part in making 'make In India' campaign launched by Prime Minister Narendra Modi a success," said Mr Kalraj Mishra, Minister of Micro, Small and Medium Enterprises, Government of India, while inaugurating the Global R and D summit , 2014. He said that innovation and research was necessary to produce goods with zero defect and zero effect on environment.
The Minister stated that we have to make full use of our young talent and capability for innovation by our scientific talent through interdisciplinary research and next generation innovations. He said that Government has taken number of steps in this direction.
Also, India’s steel minister Mr Narendra Singh Tomar has announced creating a fund of Rs 100 crore (US$ 15.71 million) 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 utilize locally available cheap raw material, to remain competitive in the world market.”
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 be grow at a CAGR of 14 per cent to reach US$ 42 billion by 2020, while it stood around US$ 14.7 billion in 2012.
India is also set to witness high growth in its agriculture and pharmaceutical sectors with the government investing huge sums for setting up research centres specifically dedicated for R&D in these fields. Also, the Indian IT industry will add to the development of the R&D sector as India makes its way to the top of the world IT market.
Exchange Rate used: INR 1 = US$ 0.0157 as on December 26, 2014
References:Media Reports, Press Information Bureau (PIB), Innovation Council of India, Union Budget 2014-15, 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.
India's R&D sector has been growing at an astonishing pace of 20 per cent per annum for the last several years.
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