Wave of the future
Although the R&D movement in India is still in its early
stages, the country has the potential to grow into a
global R&D hub. Companies have realised the benefits
of spending more on R&D, concludes Sanjeev Kumar
Recent data compiled by The
National Association of
Software and Services (also
known as Nasscom), The Economic
Times Intelligence Group and other
sources suggest that India has over
21 million graduates, of which
around six million are science
graduates, around 1.3 million with
engineering degrees and over
600,000 are doctors. There were
additional 2.4 million graduates,
including 26,000 doctors, and
around 600,000 science graduates
added in the year 2004 alone to
the overall numbers of graduates
in the country.
India has a huge talent force,
which gives the country a solid
footing and advantage over its
peer group in the research and
development (R&D) sector.
The R&D story so far
According to the Government
figures currently,more than 155
international companies are
already doing R&D in India. The
pharmaceuticals, automobiles and
IT sectors are leading the way.
Indian companies along with major
international companies have
already started expanding and
increasing their R&D activities in
the country.
In the year 2004, Ranbaxy (the
pharmaceutical giant) spent
around seven per cent of its sales
revenue of US$ one billion on R&D
and Dr. Reddy's Laboratories spent
around 14 per cent of its annual
sales of around US$ 446 million on
R&D. Tata motors and Mahindra &
Mahindra have started allocating
more capital to R&D to become
more competitive.
The increased spending on
R&D has started to deliver results
for both the companies in the auto
sector in India. This will only
encourage the domestic as well as
foreign automobile companies
based in India to spend more on
R&D. Indian companies in the past
have had a very bad track record
on R&D spending; they spent less
than one per cent on R&D, but now
things are changing, and the
situation is different as the
companies have realised the
benefits of spending more on R&D.
Microsoft, Motorola and Intel
have all increased their R&D facilities in India. In January 2003,
Microsoft launched its third
international research centre in
India. Intel's R&D centre in India
designs everything from hardware
to software that is used to make its
semi-conductors work with other
programs. Intel's development
team in India works on
communication products that are
used worldwide.Motorola is using
its R&D centre in India as the R&D
hub of the company. Motorola's
India R&D centre created a sub-US
40 phone, which is aimed at the
emerging market consumers.
Many other America-based
companies are already designing
auto parts and consumer
electronic items in India by either
outsourcing or setting up their
own design centre in India. Patents
granted to India are rising.
According to the data from the US
patents office, in the year 2003,
patents granted to India-based
innovators increased by over 36
per cent. According to the latest
figures, the revenues from product
development and R&D services in
India stood at around US$ three
billion. The huge pool of highly
educated scientific talents, lower
wages, lower research cost, the
relatively easy access to
participants in clinical trials (for
pharmaceutical companies) and
reforms in India's patent regime
providing more protection to
intellectual properties will
encourage more foreign
companies to either set up their
own R&D centres in India or
outsource their R&D activities to an
India-based company.We will see a
continued increase in revenues
generated from product
development and R&D services in
India in the coming years.
....CONTD
