Indian Enterprises Exhibit Robust R&D Growth

Indian enterprises have demonstrated a remarkable growth in research and development (R&D) activities, surpassing their global counterparts in terms of R&D growth rate, as per a recent study conducted by the Foundation for Advancing Science and Technology (FAST). Between the financial years 2016 and 2023, Indian companies achieved a growth rate 1.2 times that of global firms across several key sectors.

R&D Growth in Key Sectors

The FAST report highlights that Indian firms showed superior growth in R&D investments particularly in the aerospace and defence, automobile and parts, chemicals, and energy sectors. This robust growth underscores India’s strengthening capabilities and focus on enhancing core industrial sectors through innovation. Despite these advancements, Indian firms lagged behind global companies in the pharmaceutical and software sectors, where the pace of R&D growth still favours the latter.

This disparity in sectoral performance indicates a targeted approach by Indian companies towards industries that are crucial for national development and strategic importance, while there is still room for improvement in sectors that are rapidly evolving globally.

Comparative Analysis of R&D Intensity and Disclosures

While Indian firms excel in the growth of their R&D activities, the study also points out a significant gap in R&D intensity compared to global firms. R&D intensity, which measures the ratio of a firm’s R&D investment to its revenue, was lower for Indian companies across all the sectors analysed. This suggests that while the growth rate of R&D investment is high, the total investment in R&D as a proportion of revenues is still not at par with global standards.

Moreover, Indian firms are more transparent in their R&D reporting, with an average disclosure score of 6.2 out of 10, significantly higher than the global average of 3.7. This higher level of disclosure reflects a growing commitment to transparency in corporate governance among Indian enterprises, potentially fostering greater trust and encouraging further investment in R&D.

Conclusion

The findings of the FAST study paint a picture of a dynamic R&D landscape in India. Indian enterprises are not only investing more in R&D but are also becoming more open about their activities. Despite the challenges in matching the R&D intensity of global players, the trajectory points to an increasingly innovative and transparent corporate sector in India. This trend, if sustained, promises to bolster India’s position as a research and innovation hub on the global stage.