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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

• 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

• 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

• 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

• 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.

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

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

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

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