India's Research and Development (R&D)

Introduction

The research environment in India exhibits a substantial opportunity for MNCs across the globe due to the intellectual capacity present in the country.  Numerous Indian engineers and management personnel are working across the globe showcasing the highly trained manpower available at minimal cost. Thus resulting in several MNCs have shifted or in the process of shifting their research and development (R&D) base to India. These R&D bases are either focused on product development or to serve the local market or to benefit the parent organization by developing a new innovative generation of products faster to the market 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.(1)
• India accounted for 40 percent (US$ 13.4 billion) of the total US$ 34 billion of globalized engineering and R&D in 2016. (2)
• India has a total of 25 innovation centers in the country and has been ranked as the top innovation destination in Asia and second in the world for new innovation centers.(3)The country accounts for 27 percent of Asia’s new innovation centers.
• 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.(4)
• India ranks second amongst the countries with the highest increase in contribution to high-quality scientific research. (5)
• India-based R&D services companies, which account for almost 22 percent of the global addressed market, grew much faster at 12.67 percent.
• 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 percent 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 center in Bengaluru, which would be the largest such center 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, aircraft, 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 cybersecurity.

Numbers

(Rs. Crores)

NATIONAL EXPENDITURE ON RESEARCH AND DEVELOPMENT
SECTOR	2011-12	2012-13	2013-14	2014-15	2015-16*	2016-17*
Central Sector	34021.44	37894.46	38879.89	43094.9	46033.97	49173.49
State Sector	5137.56	5282.86	5951.15	6327.32	6982.83	7706.25
Private Sector	23295.71	27096.51	30514.8	32538.39	37835.64	43995.28
Higher Education Sector	3506.62	3708.96	4010.05	3365.49	3664.01	3989.01
Total	65961.33	73982.79	79355.89	85326.10	94516.45	104864.03

Source:(6)

(Rs. Crores)

NATIONAL EXPENDITURE ON R&D IN RELATION TO GDP
Year		R&D Expenditure GDP at current prices		GDP at at current prices	R&D as %
Series 2011-12
2011-12	65961.33		8736329			0.76
2012-13	73982.79		9944013			0.74
2013-14	79355.89		11233522			0.71
2014-15	85326.10		12445128			0.69

Future Opportunities
Now with the government's support, the Research and Development sector in India is witnessing rich growth in the area.According to a study by management consulting firm Zinnov, engineering R&D market in India is estimated to grow at a CAGR of 14 percent 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 centers for R&D in these sectors. The Indian IT industry is also expected to add to the development of the R&D sector.(7)

Also in 2018 Budget special emphasis was given to invest in research, training, and skilling in robotics, artificial intelligence, digital manufacturing, big data analysis, quantum communication and internet of things etc.