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

Research and Development in India

    Last updated on Aug, 14 2017

Introduction

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

India’s Engineering R&D (ER&D) Globalization and Services market reached US$ 22.3 billion in 2016 and is set to rise to US$ 38 billion by 2020. @

India accounted for 40 per cent (US$ 13.4 billion) of the total US$ 34 billion of globalised engineering and R&D in 2016. #

India has a total of 25 innovation centres in the country and has been ranked as the top innovation destination in Asia and second in the world for new innovation centres.* The country accounts for 27 per cent of Asia’s new innovation centres.

India has moved up to the 60th position in the 10th edition of Global Innovation Index (GII) in 2017 and will likely get into the list of the top 25 nations in the next 10 years.%

India ranks second amongst the countries with highest increase in contribution to high-quality scientific research. ^

India-based R&D services companies, which account for almost 22 per cent of the global addressed market, grew much faster at 12.67 per cent.

The market for Engineering R&D (ER&D) companies in India is mainly structured across pure play PES companies such as Cyient, QuEST, eInfochips and the larger IT companies with a PES play such as Wipro, TCS, HCL. India's ER&D services market is expected to reach US$ 15-17 billion by 2020 and North America continues to be the largest market contributing to 55 per cent of revenues.

Recent Investments and developments

  • Intel India plans to invest Rs 1,100 crore (US$ 170.59 million) to expand its research and development centre in Bengaluru, which would be the largest such centre outside the US.
  • Tata Motors has tied up with Microsoft for using its connected vehicle technology along with artificial intelligence (AI) capabilities to improve the in-car connected experience.
  • Robert Bosch Engineering and Business Solutions (RBEI) has inaugurated its new reliability testing laboratory in Naganathapura in Bengaluru, build for US$ 3.5 million, and capable of testing Electronic Component Units (ECU) used in automobiles, aircrafts, home appliances and similar other systems.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote R&D sector are:

  • The Government of India aims to develop India into a global innovation hub by 2020 on the back of effective government measures taken to provide an enabling environment for growing research and development in India, says Mr Y. S. Chowdary, Minister of State for Science and Technology & Earth Sciences, Government of India.
  • India and Israel have agreed to enhance the bilateral cooperation in science and technology in the next two years by providing US$ 1 million from each side to support new research and development (R&D) projects in the areas of big data analytics in healthcare and cyber security.

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$ 0.0155 as on June 20, 2017

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

Notes – @ - according to report released by Zinnov Management Consulting, # - according to a study by consulting firm Zinnov, % - as said by Mr Francis Gurry, Director-General at the World Intellectual Property Organization, * - according to a Capgemini report, ^ - according to a survey conducted by Springer Nature.

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

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