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: July, 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: July, 2015



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.

Market Size

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.

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. At present 2,700 people are working here, with 98 per cent being local workers.
  • Chinese smartphone maker Xiaomi is set to sign the lease for its R&D centre in Bengaluru, which is expected to be launched later in 2015, at a time when the government is pushing for more foreign investments in India. "We have taken a 20,000 sq ft building on lease for the R&D centre in Cessna Business Park, Bengaluru," said Mr Manu Jain, head of India operations. "We plan to have it operational by Q2 (second quarter) 2015. So by April or May, the development center should be up and running.
  • American chipmaker Broadcom is betting big on opportunities in the Internet of Things and wearables market in India as it develops solutions tailored to India and other emerging nations from its Bengaluru R&D unit. Broadcom, which has a global headcount of about 11,000 people, has about 1,500 people at its India R&D centre.
  • Dell is looking towards India to transform its R&D capabilities. The company is strengthening its engineering team here and increasing the number of patent applications filed from India — which, a senior executive said, has already become the largest contributor to software patents for Dell — as the local unit gets a large piece of investment that chief executive Michael Dell has promised for its R&D push.
  • Specialty chemicals maker BASF SE has announced that its Indian subsidiary BASF Chemicals Pvt Ltd has started work for setting up its new R&D centre in Navi Mumbai. The R&D centre is being set up with an investment of approximately Rs 380 crore (US$ 61.1 million).
  • Twitter Inc is planning to set up an R&D centre in Bengaluru to grow faster in emerging markets, according to a recently released report. This will be the San Francisco-based company’s first such facility outside the US. 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 at the country's top cardiac institutes access to the company's 3D heart simulation platform.
  • Madurai would soon be the home to direct selling major Amway’s R&D centre, where a manufacturing facility also is expected to be fully functional by the third quarter of this year. The R&D facility is expected to take shape in the next 18 to 24 months,” said Mr Anand Budhraja, General Manager, Amway India.

Government Initiatives

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$ 16.07 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.

India and United Kingdom have agreed to scale up their bilateral research & innovation relationship to a greater level. In a meeting held between Dr Harsh Vardhan, Minister for Science & Technology, and the UK's Minister for Universities, Science and Cities the Rt Hon Greg Clark MP held in New Delhi, it was decided that a new be known as the Newton-Bhabha Fund will be taken to further the relations..

"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$ 16.07 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.”

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 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$ 0.016 as on March 24, 2015

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.

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