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BRIC - India

Mon, 12/17/2012 - 6:47pm
Martin Grueber, Research Leader, Battelle and Tim Studt, Editorial Director, Advantage Business Media
India Chart
2013 GDP, billion US$, PPP $5,020
2013 GERD, billion US$, PPP $45.20
R&D/GDP 0.90%
Population, million 1,205
GERD/Person $38
Published Research Papers
1999-2003, Physics 11,700
2004-2008, Physics 17,300
1999-2003, Chemistry 21,200
2004-2008, Chemistry 33,500
Academic Research Share 26%
Institute Research Share 36%
Industry Research Share 32%
Other Research Share 6%
Source: Battelle/R&D Magazine, UNESCO, Thomson Reuters

GFF GlobeIndia has averaged greater than 7% annual GDP growth since 1997, but the current outlook is unusually uncertain. Real GDP growth for 2012 is expected to be close to 5%, according to the International Monetary Fund (IMF). The IMF's GDP growth forecast for 2013 increases to nearly 6% following various recent reforms. 2013 economic growth is expected to yield R&D spending growth of about 12.2% over that spent in 2012, which follows a relatively modest increase of 5% over what was spent in 2011.

A significant portion of India's R&D focuses on support for its services sector, which accounts for about two-thirds of India's GDP. India's pharmaceutical industry also accounts for a sizable portion of its R&D, especially in the generic drug market where Indian companies, such as Ranbaxy Laboratories, maintain a sizable global market share. These Indian generic manufacturers have also bought into European generic suppliers to increase their access to the European marketplace.

Low-cost R&D
India's dominance as the manufacturer of cheap medicines for poor people around the world is well established. While many of these drugs have been derived from western patented drugs, there also has been a strong supply of drug developers in Indian universities that were biased in favor of science to the detriment of engineering. As is typical for the global pharmaceutical business, a number of Indian pharmaceutical companies have purchased stakes in foreign pharmaceutical companies.

India's cultural tendency to supply inexpensive products for its large population carried over into the automotive marketplace, where Tata Motors has become a low-cost automotive supplier. With that success it has purchased foreign automotive manufacturers, such as Jaguar and Land Rover, to gain global market share and entry into foreign markets.

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Indian government funding of R&D accounts for more than two-thirds of the total funding sources. Industry funding of R&D has steadily increased over the past 20 years, but still is less than a third of the total (compared to the U.S. and China, where industry accounts for more than two-thirds of all R&D funding). Government support of R&D in India tends to focus on classical objectives for public R&D funding, such as nuclear energy, defense, space, health and agriculture. The amount of R&D dedicated to basic research in India has also steadily increased from less than 20% of the total ten years ago to more than 26% now.

R&D Staffing Shortages
As noted on the chart on page 4 of this report, India has one of the smallest ratios of scientists and engineers per million people compared to other countries (137/million people). Part of this shortage is due to the lack of quality higher education institutions. Even with its large population, which is estimated to become the largest in the world by 2025, there is an estimated 25% shortage of engineers in the country. This is different than other countries in the region, such as China and South Korea, that produce larger numbers of engineers each year than any other countries in the world.

India's Industrial R&D
Company 2010 R&D mil. U.S. $ R&D, % Revenue
Tata Motors 397.8 1.50%
Prithvi Information 246.3 60.50%
Polaris Software 228.0 67.60%
Bharat Heavy 176.3 2.50%
Mahindra & Mahindra 157.2 2.50%
Lupin 112.7 9.30%
Infosys 112.0 1.90%
Reliance Industries 110.0 0.20%
Core Projects 96.2 53.40%
Bharat Electronics 67.2 5.90%
Source: Battelle/R&D Magazine, EU Industrial R&D Scoreboard
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