Last Updated: November 05, 2015
Jung Soo Shin
Former CEO and President, South West Asia, Samsung
Last Updated: September, 2015
INNOVATION AND PATENTS SECTOR REPORT | August, 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.
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.
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.
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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