Attractiveness: India is tipped to be among the top three destinations where multinational companies (MNCs) planned to spend their R&D budgets over the next three years, according to a 2004 survey by The Economist Intelligence Unit. A recent UNCTAD survey corroborates: India was number three in terms of R&D location attractiveness – close behind China and the US. The number of R&D centres of MNCs trebled from 100 to over 300 in the past three-four years.

Patents: In patents, India lags behind global peers; a US ranking of patents between 1995 and 2004 showed India in 24th place globally. Aggregate domestic R&D spending has never exceeded 1 per cent of GDP – just Rs 21,600 crore in 2004; in purchasing power parity terms, it was at Rs 1,07,600 crore, making India the world’s ninth largest spender. But China spent more than three times as much at Rs 3,76,000 crore, becoming the third-largest spender.

Spending: About 75-80 per cent of India’s R&D spending comes from public enterprises, while in China, more than 65 per cent comes from private enterprises.

The total private R&D investment is estimated to have risen from Rs 3,200 crore in 2002 to Rs 16,400 crore in 2005. This has led to a corresponding increase in total R&D spending from Rs 16,000 crore in 2002 to Rs 34,000 crore in 2005 (when total private spending is estimated to have risen to 48 per cent). India has seven firms in the worlds top 1,250 companies ranked on the basis of investments in research and development.

Manpower: India has between 117,528 and 300,000 scientists, researchers and engineers while China has three times as many at 926,252.

China vs. India: As investment and output in China are mostly for local consumption, India with its local and global focus could emerge as the dark horse and become the No. 1 knowledge destination by 2020.

US-based DuPont has invested Rs 200 crore in its R&D centre in India that is the only ‘One DuPont Centre’ worldwide housing everything from biotech to IT solutions. IBM has set up R&D centers staffed by 3,000 engineers in India, which have become a source of innovation on everything from software to semiconductors to supercomputers.

AstraZeneca India, could realize its biggest success by introducing a cheaper and more efficient TB drug by 2010. This could be a big breakthrough as no new TB drug has been discovered since 1964. The company may take a crack at discovering new drugs for diseases such as dengue and diarrhoea.

The Microsoft’s development centre in Hyderabad works on core product groups such as Windows, Office, Visual Studio, and data and storage platforms. It has fully developed from scratch products like Virtual PC and Data Protection Manager.
Microsoft’s Koppolu has orchestrated a 100-strong external partner team which includes HP, Intel, Wipro and TCS, sitting across the world to come up with an RFID solution, slated for release by the end of this year.

Motorola’s team of 30 full-time researchers and scientists are working on phones that will have multi-lingual displays and speech recognition and noise cancellation technology. The team is responsible for more than 40 per cent of all software that goes into Motorola phones, including the latest Motorazr.

General Motors chose Bangalore as its first research centre with an investment of $60 million in 2003.

A recent study by The Indus Entrepreneurs (TIE), an association of Indian IT professionals in the US, revealed that close to 60,000 professionals have relocated to India in recent years. At GM, the percentage of returning Indians to total employees is over 50 per cent; at Monsanto, it’s 30 per cent; at GE, its over 20 per cent; and at MSIDC and Biocon, it’s over 10 per cent.

Most of the captive MNC labs started with developing parts of a product or doing feature enhancements and have gone to taking over complete ownership of products and building them from ground up.

Texas Instrument’s engineers in India completely designed a single-chip cellphone solution that has made possible the Rs 1,000-cellphone dream; the chip brings down power and space consumption by 50 per cent. At MSIDC, teams have developed from scratch solutions such as RFID Biz Talk, Virtual PC, and Data Protection Manager. At Yahoo! India, employees have fully developed properties such as Avatars (images that can be customized and used on mail or messenger), Farechase (which pulls out best airfares from multiple sources such as cleartrip, travelguru, etc), podcasting service and Ourcity (compilation of city-based information).

Scientists and engineers at GE’s JFWTC are helping in designing key parts of the GEnx engine, which powers the Boeing “Dreamliner” 787 and Boeing 747. Another team at the GE’s Bangalore Engineering Center simulates bird strike and fan blade out (an occurrence when the blade comes out from the fan module) events.

Indian companies such as Tata Motors, Bajaj, Mahindra, Sun Pharma, Glenmark, Tata Steel, Dr Reddy’s and Ranbaxy are beefing up their core R&D initiatives and have produced results that have made them globally successful.
By 1996-97, the cumulative patents of Tata Steel were around 30. Last year, they had filed 234.

If we look at two recent news reports, we can appreciate what Indian technocrats and scientists are at, so far the product development capability of India is concerned.

But Indian firms are still playing catching up. According to World Bank data of the top 50 applicants for patents in India between 1995 and 2005, 44 were foreign firms. Miles to go to match the competition!