Opening up of the Indian Inc. towards research and innovation…..

Shikha Saxena
Associate Research Consultant
Zinnov Management Consulting Pvt Ltd

India Inc is witnessing a boom in R&D spending in various sectors. According to Booz Allen Hamilton, R&D spending in India has grown by 17% in 2006. whereas, comparative figures in US and Europe is only 5.2% and 2.3% respectively. With globalization, Indian corporate segment experience more and more challenges in market competitiveness and product innovation. Indian strategists are focusing on making their R&D investments judicially to get higher research output in lesser costs. Corporate India seems to have realized that product innovation is the key to survival and may serve the best competitive strategy for sustenance.

According to Capitaline Plus; Indian pharmaceutical sector is the top most R&D spender at 52% of the total expenditure of $ 1.03 mn. Interestingly automotive sector shows the 2nd highest spend at 25%, with 8 Indian automotive majors falling among the top 45 R&D spenders in the country. Indian auto companies like Tata motors, Bajaj Auto, TVS motors, Maruti Udyog and Force motors are reported to have spent around 2.01% of sales on an average in R&D this fiscal.

However these figures are small when compared to that of a global auto major; as the total Indian automotive sector R&D investment is only 0.03% of the $ 8 bn investment by Ford motors alone. Essentially this percentage is expected to grow when more and more Indian auto majors and IT companies do collaborative research; as most of the automotive innovations take place in the area of electronics.

This trend may have a positive impact over the global image of India Inc, which has already proved its mettle in the field of huge international mergers and acquisitions. India has gained a foothold in positioning itself as a low cost R&D destination but needs a greater thrust in the form of product innovation by various domestic companies to prove its potential to innovate. In future as India grabs a greater pie of the global R&D spend more and more global companies might start gravitating towards India for research and innovation.

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