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Friday, February 19, 2010

R&D Activities within Indian Companies

R&D Activities within Indian Companies

Innovation requires synergizing the energies of private enterprises, research institutes, think tanks, and government and private educational institutions. Currently, India not only provides a low-cost structure and massive pool of skilled human resources, but also offers cutting-edge R&D with high quality standards at competitive costs. After being recognized for its achievements in the IT and services sectors, India is rapidly evolving as an innovator of high-tech products of global stature and this is going to enhance the competitive advantage of India over coming years within emerging economies (BRIC).

R&D Investments in India

Domestic R&D investment is crucial for innovation. As innovation in India is still in its nascent stage, 80 percent of the domestic R&D is undertaken by the public sector, while the remaining is funded by private enterprises. The allocated science budget in India has increased at a CAGR of 12.3 percent between 2004 and 2008, to INR 242 billion.

Before economic liberalization, private sector companies in India did not invest significantly in R&D. A few notable exceptions were companies such as the Tata Group. Most R&D investments were largely made by central and state governments, and certain public-sector enterprises. However, the post-liberalization period witnessed a substantial increase in R&D investments by private sector companies. The corporate R&D intensity (R&D expenditure as a percentage of sales) increased from 0.07 percent in 1991 to 0.51 percent in 2004.
The growth in R&D spend has been led by foreign multinational companies, which have both established in-house centers in India and outsourced R&D activities to the country. However, there has been a substantial increase in the R&D spend of Indian private sector companies as well. Indian companies from IT, pharmaceutical and automobile sectors have started competing with foreign MNCs on a global scale and therefore seek to increase their R&D activity to keep up with the latest technology.
Leading Indian Investors in R&D
Several large-scale Indian companies across a range of sectors, such as Bharat Heavy Electricals Ltd., Bharat Electronics Ltd., Dr. Reddy’s Laboratories, Ranbaxy Laboratories, Tata Motors and Wockhardt, have begun investing substantially in R&D. In 2006–07, the total R&D expenditure of the top 20 R&D investors in India was about INR 49.2 billion. Table depicts the top 20 Indian R&D investors.
Table 1: Top 20 Indian R&D Investors by R&D Spend (2006–07)

Private companies had a major share in the industrial in-house R&D expenditure in 2006–07. Only four companies—Hindustan Aeronautics Ltd., Bharat Heavy Electricals Ltd., Bharat Electronics Ltd. and Oil & Natural Gas Corporation Ltd.—among the top 20 companies, were from the public sector. Eight among these 20 companies were from the pharmaceuticals industry. The total R&D spend of these eight companies was INR 15.78 billion.

Leading Indian Patent Applicants

Among the top 200 patent applicants worldwide (from January 2005 to December 2007), 22 are pure-bred Indian organisations. Among these 22 companies, 14 are private sector firms. Table 2 depicts the top Indian private sector companies that have published patent applications at the Indian Patent Office (IPO).

Table 2: Top Indian Private Sector Patent Applicants (January 2005–December 2007)

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Clearly, the pharmaceuticals sector has the maximum number of patent applications filed with the IPO, the US, the EP and the PCT.

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Typical Areas of Research

Sectors that have witnessed significant R&D activity in recent years are as follows.

· Information and Communications Technology – Software and Hardware

· Life Sciences – Biotechnology, Pharmaceuticals and Bio Informatics

· Engineering – Manufacturing, Consumer Durables, Material Sciences and Infrastructure Construction

· Automobiles

· Energy and Chemicals

· Agriculture

· Others – Space, Aviation, Defence, Nuclear Technology

The estimated R&D activity levels in these sectors are provided in Table 3.

Table 3: Estimated R&D Activity Levels in Various Sectors (2006)

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Activity levels cover various parameters, such as R&D expenditure, the number of employees, patents, technical publications, and product and process development. Process development is characterized by a high level of R&D activity in all the sectors. However, product development is marked by moderate R&D activity.

References:

1. India's Emergence as a Global R&D Center – December 2007 Working Paper

2. R&D India Newsletter

3. India's Emergence as a Global R&D Center December 2007 Working Paper

2 comments:

Alan Hill said...

Dib,
India is at the size that whatever it sets it's mind to do, it is almost automatically a leader by virtue of their activity which is equal to many other countries max productivity.
Having said that, the 'win' is not in activity alone but in perceived value to the customer. Something India wins at in IT and services sectors hands down.
Here in America we have a cultural 'myth' (similar to the "John Wayne myth) that a lone inventor in his basement can become successful.
My conclusion: If India wants this position as a world innovator they can easily have this by acting on it and by successfully marketing it as a valuable gift to the world economy.
My question: does India's government have a 'mission' to market the country as world class innovators? if so, this will easily happen.
I wish good luck to India on this endeavor :)

Thanks
Alan

jadab said...

Hi sir,
sir I am not getting more time to visit your blog. But when ever I got time ,I tried to read your article. this is a very good article. sir I have a business idea which I want implement in bhubaneswar. for that I want your help.I want to talk to you , can you plz send me your phone no throuugh this mail id.
JADAB CHARAN BISWAL(IB - 2008-10)
MY ID IS -
jadab.ceasefire@gmail.com

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