Indian companies overtake global giants in R&D growth: report

Foundation for the Advancement of Science and Technology (FAST India) has released a comprehensive report on the state of industrial research and development in India in association with IIFL Securities. The State of India’s R&D Industry report compares Indian and global companies, highlighting areas where Indian companies excel and where they need improvement.

This report compares the R&D activities of Indian companies with their global peers in six key sectors: pharmaceuticals and biotechnology, automobiles and components, chemicals, energy, aerospace and defense, and software and technology.

From FY2016 to FY2023, Indian companies have shown 1.2 times greater growth in R&D than global companies. Despite the challenges posed by the Covid-19 pandemic and changes in R&D tax policy, Indian companies have maintained strong R&D growth.

Global companies have a higher R&D intensity (2.9 times higher than Indian companies) and a higher percentage of PhD students (3.7 times higher) compared to Indian companies. Global companies lead significantly on production metrics, generating 13.1 times more patents and 1.3 times more publications per billion dollars in revenue than Indian companies. However, Indian companies lead in disclosing R&D-related information in their annual reports, scoring an average of 6.2 out of 10 compared to the global average of 3.7.

The pharmaceutical sector is the best performer among Indian companies in terms of both R&D intensity and percentage of employees with PhD degrees, while also ranking high in patents in terms of revenue. Global companies in the automotive and defense sectors have a distinct advantage, with significantly higher patents in terms of revenue compared to their Indian counterparts.

Indian software companies show better performance in terms of outputs (publications by revenue and patents by revenue) compared to inputs (R&D intensity and percentage of employees with Ph.D.). To move up the global value chain, Indian companies need to increase investment in research and development.

Currently, India’s R&D expenditure is 0.7% of GDP, with the government contributing 0.6% and the private sector contributing only 0.1%. The report says it is crucial to improve industrial research and development through supportive policies such as tax incentives and encouraging private sector involvement.

States play a key role in ridiculing industrial R&D and encouraging sustainable technological progress.

By investing more in research and development and leveraging supportive policies, Indian companies can increase their global competitiveness and contribute more to technological innovation.