NEW DELHI: The R&D spends of Indian firms are growing faster than global firms albeit on a low base, said a latest report by Foundation for Advancing Science and Technology (FAST India). The study pointed out that the Indian firms have reported higher growth in R&D spends than global firms during FY16 to FY23 across four sectors – aerospace and defence, automobile and components, chemicals and energy.
“Indian firms performed slightly better than the global firms in R&D growth and have maintained their growth despite COVID-19 pandemic and changes in the R&D tax regime,” the report said.
The report has covered 119 domestic companies and analysed their R&D strength in four key parameters such as R&D intensity, publications by revenue, patents per billion dollar revenue and proportion of PhD employees. For instance, within the Indian cohort, pharma firms have ranked at the top in the R&D intensity and proportion of PhD employees. Defence firms, on the other hand, have scored better in publications by revenue parameter. Meanwhile, chemical firms have performed best in patents by revenue and proportion of PhD employees as compared to the global firms.
“Despite facing challenges such as the COVID-19 pandemic and changes in the R&D tax regime, Indian firms have shown slightly higher R&D growth, albeit from a much lower baseline, compared with global firms and scored well in R&D disclosures to the public. However, the findings also underscore the need for Indian firms to increase their performance in both R&D inputs and outputs to perform competitively in the global market,” said K. VijayRaghavan, former principal scientific advisor to the government.
Interestingly, Indian firms have performed exceedingly well in disclosing R&D-related information in their annual reports. For instance, out of 10, the average Indian R&D disclosure score was 6.2 as compared to the average score of 3.7 in case of global firms.
However, there are some areas where the Indian firms lag their global counterparts. For instance, global firms published 355 times more patents than Indian firms during the study period as per absolute numbers. Similarly, the global firms invested 2.9 times of their profits in R&D as compared to Indian firms.
“In the software sector, the difference between global and Indian firms was very stark with global firms investing 30.9 times of their profits in R&D. This shows that global firms prioritise investing a large percentage of their profits into R&D,” the report said.
