Photo Source: Pexels.com
In a recent analysis by the Foundation for Advancing Science and Technology (FAST), Indian enterprises demonstrated significant growth in research and development (R&D) from FY16-23, outpacing their global counterparts with a growth rate 1.2 times higher.
Despite this impressive growth, Indian firms still fall behind in R&D intensity compared to global companies across all sectors studied.
Indian Firms Lead in R&D Growth
The report reveals that Indian companies have shown remarkable R&D growth in several key sectors. Notably, Indian firms outperformed global companies in aerospace and defense, automobiles and parts, chemicals, and energy. This indicates a robust expansion in innovation efforts within these industries.
Lagging in R&D Intensity
Despite the strong growth in R&D expenditure, the report highlights a critical gap in R&D intensity among Indian firms. R&D intensity, measured as the ratio of a firm’s R&D investment to its revenue, remains lower for Indian companies across all sectors when compared to their global counterparts.
This underscores a need for Indian enterprises to enhance their investment in R&D relative to their overall revenue.
Sector-wise Performance
- Aerospace & Defense: Indian firms excelled in R&D growth, surpassing global companies.
- Automobiles and Parts: Indian enterprises led in innovation expenditure growth.
- Chemicals: Indian firms showed significant advancements in R&D.
- Energy: The sector saw Indian companies outperforming global peers in R&D growth.
- Pharmaceuticals and Software: Global companies maintained a lead over Indian firms in these sectors, indicating stronger R&D investment and intensity.
Superior R&D Disclosures by Indian Firms
An interesting finding from the study is the higher R&D disclosure scores of Indian firms compared to global firms. Indian companies averaged a score of 6.2 out of 10 in R&D disclosures, significantly higher than the global average score of 3.7. This suggests a greater transparency and commitment to reporting R&D activities among Indian enterprises.
Study Methodology
The study conducted by FAST compared innovation and R&D efforts between Indian and global firms across six key sectors: Aerospace & Defense, Automobiles, Chemicals, Energy, Pharmaceuticals, and Software.
A total of 20 companies from each sector were analyzed, comprising 10 Indian and 10 international firms, providing a comprehensive overview of R&D trends and practices.
This detailed analysis sheds light on the dynamic landscape of R&D in India, highlighting both the strengths and areas needing improvement for Indian firms in their quest to compete on a global scale.
