Govt considering scheme to encourage R&D investments

By siliconindia   |   Tuesday, 30 October 2007, 07:00 Hrs
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New Delhi: The government is planning to formulate a new license scheme to encourage in-house R&D expenditure by IT firms, reported The Economic Times.

As per the proposal, which is under consideration, the government is looking at introducing a special incentive for IT companies whose R&D expenditure towards software development is above a certain limit. The modalities are likely to be finalized by the end of the fiscal, says sources. Initially the proposal was mooted by the electronic and software export promotion council (ESC), and later received support from DIT and department of science and technology.

According to official data, the government spends about 80 percent of its total R&D expenditure mainly on defense and space research whereas in private sector the total expenditure spend on R&D is very low.

Though the Indian industry is increasing its investment on R&D, currently is only 0.5 percent of its sales turn over, accounting for about 20 percent of the nation?s total R&D expenditure. However, in U.S, EU and Japan spend 52 percent, 68 percent and 72 percent respectively.

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