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Only 4 Indian companies in top 1000 R&D spend list

By SiliconIndia | Sunday, 15 November 2009, 18:23 Hrs | 8 Comments

Only 4 Indian companies in top 1000 R&D spend list

New Delhi: In a list of 1,000 publicly-traded companies in the world, which were the biggest spenders on research and development, only four Indian companies managed to be in the list. The list is compiled by global management consulting firm Booz & Co. Last year, there were six companies which had made in the top 1000, according to Economic Times.

Tata Motors, BHEL, Dr Reddy's Lab and Sun Pharma are in the top 1000 list this year. Those from last year's list which did not make it this time are Ranbaxy Laboratories and Aditya Birla Nuvo. The combined R&D spends by them grew 43 percent to $516.2 million. The four Indian companies featured have had moderate sales growth of 15.5 percent with $10.8 billion in combined sales in 2008 as against $9.4 billion in 2007.

Tata Motors (rank: 338) alone spent $246 million as against $150 million the previous year. "For our long term capital expansion we have not restricted our R&D spends and we'll continue to spend more this fiscal also," says a Tata spokesperson.

It's followed by BHEL (rank: 590) that put $115 million in 2008, an 82 percent jump in its R&D spends. Dr Reddy's Laboratories, ranked 774, committed $84 million which is 7 percent more than its 2007 spend. So did Sun Pharmaceutical Industries which spent $71 million in 2008, up by just 2.89 percent.

The top 10 global R&D spenders in 2008 according the study are, in descending order: Toyota, Nokia, Roche Holding, Microsoft, General Motors, Pfizer, Johnson & Johnson, Ford, Novartis and Sanofi-Aventis. Toyota spent $8,994 million in R&D that was 4.4 percent of their sales. Nokia spent $8,733 million that was 11.8 percent of its sales. In third rank came Swiss healthcare company Roche Holding that's spent $8,168 million or 19.4 percent of its sales.

Overall, R&D outlays for these Global 1000 companies rose by 5.7 percent to $532 billion, while sales were up 6.5 percent. The study explains that companies have been maintaining R&D expenditure because innovation is a fundamental component of strategy in the long term.

Product cycles and investment cycles are linked since most commitments are made to product development investments years in advance. "The recession is viewed as an opportunity to get a leg-up on competition especially as the upturn begins," says Thomas A Stewart, Chief Marketing and Knowledge Officer with Booz & Co.

In 2008, two-thirds of R&D spending was concentrated in three industries: computing and electronics (28 percent), health (23 percent), and automotive (16 percent). India was in the 28th position of the top 40 countries that spent the maximum on R&D whereas China was 16th. "Both India and China are growing at 30 percent on their R&D spends, the highest among all countries," says Stewart.

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Reader's comments(8)

1: Thats because no one care about companies with innovative products in India. So most of indian companies focus on and spend money for how to get contract without doing anything.

Posted by:WakeUp - 16 Nov, 2009

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2: When there is such a lot at stake, need of more innovations driving competitiveness, we need to think whether such low level of R&D spending is adequate. It also depends upon what we need. There are studies to show that firms which do not invest in innovations can find alternate means of acquisitions and partnerships. We should not forget that this is the era of open innovations with even Nokia and Sony Ericsson teaming up at Symbian. These points are to be considered before passing judgement on poor R&D spending. It is quality rather than qunatity which counts. Of course, one may argue our performance on patents is also very poor. Hence, priorities niow will be enhancement of quality of R&D so that we get more patents. But our professionals are not trained enough on cutting endge technology. Something for the education field to be reviewed here. Thus, there are many complex issues related with R&D and its spending. Evidently we cannot go by the rank in mere spending.

Posted by:Dr.P.R.V.Subramania Iyer - 16 Nov, 2009

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3: India Software Development Company

Posted by:Harkirat Singh Bedi - 16 Nov, 2009

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http://www.ibosstechsolutions.com/index.htm

We will make it there soon too

Harkirat Singh Bedi Replied to: Harkirat Singh Bedi - 16 Nov, 2009

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5: It is distressing to note that R & D spending in India both by public and Private sector organizations and Institutes is meager. The report by Shri Kapil Sibal Former Minister for Science and Technology in Rajya Sabha in March 2008 was alarming.

India lags behind China in spending on research and development work as well as number of scientific researchers, science and technology minister Kapil Sibal informed the Rajya Sabha on Wednesday. Replying during Question Hour, he said the number of core researchers in India was about 1.5 lakh as compared to China's 8-10 lakh.
Number of persons doing research and development in Scandinavian countries is 7,000 per million of population and 4,700 per million of population in the US. In India, there are 156 researchers per million of population. “This is a very big issue,” he said. R&D spending as percentage of GDP in India is only 0.8% as compared to China's 1.23%. Developed countries have R&D expenditure of up to 3% of GDP.
Of the 0.8% expenditure in India, 80% is by public sector while the private sector share is only 20%. In China and the US, the public sector share is only 30% each while in Japan it is only 18%.

Private sector component in R&D will have to increase, he said adding the government had given a slew of tax incentives on R&D spend in sectors like pharma and electronics.

Sibal said to increase number of researchers in the country, university system will have to be strengthened by expanding and upgrading infrastructure as presently R&D quality in university is negligible.

The 11th Plan allocations for scientific departments including departments of science and technology and atomic energy, has been increased three folds to Rs 75,304 crore during the 11th Plan (2007-2012) as compared to Rs 25,301.35 crore of 10th Plan Period, he said.

“The expenditure on research and development (R&D) as percentage of GDP in India is lower compared to that of a few developing countries like Brazil and China, but is higher compared to countries like Argentina, Cuba, Sri Lanka and Pakistan,” Sibal said.

Dr.A.Jagadeesh Nellore(AP)

Posted by:Dr.A.Jagadeesh - 15 Nov, 2009

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Its really shocking to know that in the country like ours which is vying to become a knowledge economy the expenditure on R&D is so less. The percentage of R&D investment clearly tells about the quality of work done by our private companies.

Hemant Replied to: Dr.A.Jagadeesh - 16 Nov, 2009

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We in India have been "piggy-backing" on the original products invented in other countries around the world for the last 60 years after the independence ! Some other Asian countries like Japan,Korea,Taiwan did the same in 50's,60's and 70's respectively. However by 1970 Japan had yheir own international brands like SONY,TOYOTA,HONDA et al ! Korea had their SAMSUNG,HUNDAI,LG etc. by 1980 and Taiwan its Acer comuter by 1990 ! India , after the "piggy-backing" and "body-shopping" by its I.T. industry since 1965 (TCS) ,
1978 (WIPRO) ,1985 (INFOSYS) has still to offer to the world a "branded" I.T. product. Of course , the FLEXCUBE banking financial product of iFlex , well-known internationally in the banking sector , was an R&D effort of CITICORP's wholly-owned Indian subsidiary COSL(Citicorp Overseas Software Ltd) in SEEPZ ! That too now owned wholly by ORACLE Corp. of USA ! India's one ond the only hope of giving to the world a "brand" image could be from the house of TATA's ! Mr.Ratan Tata has often made reference, in his public address about his passion for creating an international brand. I sincerely hope Tata's NANO car becomes one and puts TATA brand in line with SONY, TOYOTA, HONDA,LG,Hyundai,Acer ! I guess China too is trying to make their Huwei ( Cisco of China) brand international. There is every chance that with its higher R&D-to-GDP spending China may come up with its own international brands by 2020 ! Let us see where India stands in this race in 2020 !

Pandoba Replied to: Dr.A.Jagadeesh - 15 Nov, 2009

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8: ya. and they say that Indian IT is do good. but on the other hand, the indian mid sized cos are planning to increase their IT spend in 2010. so thats good.

Posted by:hamida - 15 Nov, 2009

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