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Global R&D activities in India

Presentation by Prasada Reddy, Research Policy Institute, Lund University, Sweden, 2005

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What: The presentation explains why India is an interesting location for outsourced R&D and then analyses the impact of such a process within the national economy. The question which sectors are particularly interesting for FDI in R&D is discussed in depth. The role of adequate policies forms the last part of the presentation. Who: Relevant for anyone studying or teaching R&D. How: This presentation can be used as a background reading for a course on R&D.

Global R&D Activities in India


Prasada Reddy
Research Policy Institute


Lund University, Sweden




Overview 1


• India successful in attracting R&D-related FDI.
• RPI Database - total R&D units (only


regional/global) in 1999 in developing Asia 286.
• Out of which India had 196 units.
• Software, Telecom & Networks,


Biopharmaceuticals and IC design.




Overview 2
• Astra Zeneca (1987) - Biopharmaceuticals.
• Texas Instruments (1986) - Next-generation ICs


and methodologies for designing ICs (500
engineers).


• Motorola (1994) - 3 units, telecome software,
CMM Level 5.


• Intel (2000) - IC Design (1000 engineers).
• General Electric (2001) - White goods/medical


equipment to aircraft engines (2000 researchers)




Overview 3


• TNCs R&D units in India are stand-alone
units with no manufacturing or marketing in
India.


• Non-equity-based strategic partnerships in
R&D with Indian research institutes
(pharmaceuticals and chemicals) and
enterprises (IT-related).




Why India as a Location?
• Pools of well-trained scientists & engineers.
• Reputed national research institutes & universities


(e.g. IITs, IISc, IICT & CDR).
• Western style management.
• Intellectual property rights regime.
• English as the business language.
• Indian Diaspora in USA & Europe.
• Astra & TI as pioneers.




Impact of Global R&D 1


• Inculcation of R&D culture.
• Technology transfer - application


methodologies.
• Emergence of scientists and engineers as


entrepreneurs (spin-off firms).
• Demonstration effect on Indian companies.




Impact of Global R&D 2
• Acquisition of new skills by local firms (e.g


architect firms).
• Development of new disciplines and


specializations in universities (e.g. courses on
IPRs to scientists).


• Spontaneous development of clusters (Bangalore,
Chennai, Hyderabad).


• Emergence of Venture Capital business.
• Competition for the cream of the talent.




Outflow of R&D-related FDI


• Major investors - IT and Pharmaceutical
companies.


• R&D in early stages of drug discovery.
• R&D in software to special customers and


to cater to regional markets (IT companies).
• Technology monitoring.
• To meet the requirements to enter into


European and US markets.




Policies
• R&D-related FDI inflow in spite of the national


level policies (early stages).
• More active regional governments.
• Liberalization of FDI policies (100% ownership,


etc.).
• Liberalization of outward FDI policies.
• Creation of strong national innovation system (e.g.


human resource development).
• International policy regime (e.g TRIPS).




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