Indian Firms Show 1.2-fold R&D Growth Over Global Counterparts: Report

Between FY2016 and FY2023, Indian firms have shown 1.2 times growth in R&D compared to global firms, indicating robust development despite challenges such as the Covid-19 pandemic and changes in the R&D tax regime, according to the report on the State of Industry R&D in India, released by the Foundation for Advancing Science and Technology (FAST India), in collaboration with IIFL Securities.

As per the report, the Global firms led significantly in input parameters, with 2.9 times higher R&D intensity and 3.7 times more PhD employees than Indian firms. In terms of output, global firms outperformed with 13.1 times more patents and 1.3 times more publications per billion USD revenue than Indian firms.

Indian firms excelled in transparency, with an average R&D disclosure score of 6.2 out of 10, compared to 3.7 for global firms.

In the pharmaceuticals sector, Indian firms led in R&D intensity and the proportion of PhD employees, highlighting their strong focus on advanced research capabilities. Energy companies lagged behind other Indian sectors in R&D intensity and PhD employee proportion.

Whereas, global firms demonstrated 30.9 times higher R&D investment than their Indian counterparts, showing a significant gap in this rapidly evolving field.

Varun Aggarwal, Co-founder of FAST India, said that the Indian industry has made great strides, but it needs to invest more in R&D to ascend the global value chain.

Former Principal Scientific Advisor to the Government of India, K Vijay Raghavan highlighted the importance of the report in understanding the comparative performance of Indian and global firms. He noted, “Despite significant challenges, Indian firms have shown commendable R&D growth and transparency. However, there is a clear need to enhance R&D inputs and outputs to compete globally.”

The reports also noted that the global firms had 355 times the absolute number of patents compared to Indian firms. When normalised per billion USD revenue, this figure stands at 13 times.

Global companies invested 2.9 times their profits into R&D compared to Indian firms. The software sector showed the largest disparity, with global firms investing 32 times more in R&D intensity.