{"id":233890,"date":"2023-03-23T20:39:44","date_gmt":"2023-03-23T15:09:44","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=233890"},"modified":"2023-03-23T20:39:44","modified_gmt":"2023-03-23T15:09:44","slug":"rd-indias-missing-giants","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/rd-indias-missing-giants\/","title":{"rendered":"R&D: India’s missing giants"},"content":{"rendered":"\n

Source-<\/strong> The post is based on the article \u201cR&D: India’s missing giants\u201d published in the \u201cBusiness Standard\u201d on 23rd March 2023.<\/p>\n

Syllabus: <\/strong>GS2- Government policies and interventions for development<\/p>\n

Relevance<\/strong>– Innovation for growth of economy<\/p>\n

News<\/strong>– The article explains the lack of R&D expenditure in India. It explains the need for global brands in India and creating a world-competitive industry to build these brands.<\/p>\n

What are issues with R&D expenditure in India?<\/strong><\/h2>\n

India lags the world in R&D. It is the fifth largest economy<\/strong>, but ranks 16th in investment on R&D.<\/strong><\/p>\n

Large firms worldwide dominate investment in technology. The top 20 investors in industrial R&D<\/strong> account for over 20% of the total industrial R&D<\/strong> done by millions of firms worldwide. But, the 26th largest investor in industrial R&D worldwide invests more in R&D than all of Indian industry combined.<\/p>\n

Top five firms in the non-financial secto<\/strong>r have low R&D investment in India. While the top five firms in the US spend 152 billion dollars on R&D, in China 31 billion dollars, but in India they spend only 0.9 billion dollars.<\/p>\n

R&D investment as a percent of profit<\/strong> is much more interesting. It is 37% in the US, 29% in China, 43% in Japan, and 55% in Germany. In India, it is 2%.<\/p>\n

What are the benefits of developing global brands by India firms?<\/strong><\/h2>\n

It is argued that large groups in India have failed in building a single global brand<\/strong>. It is blamed on a mentality of outsourcing<\/strong>. The international firms like Apple, Microsoft, Sony, BMW are globally associated with great products in particular industries.<\/p>\n

The brands they have built provide global reach and a premium positioning<\/strong> that delivers great profitability.<\/p>\n

How the firms in East Asian economies became global brands?<\/strong><\/h2>\n

Firms like Samsung, Hyundai, LG, TSMC and Acer did not start as global brands. They began with outsourcing, as original equipment manufacturers or OEMs<\/strong>. They build manufacturing operations of global scale. <\/strong><\/p>\n

They used their demanding buyers as a source of technology<\/strong> that made them world-competitive<\/strong>. They invested in R&D, as process innovation<\/strong>, to make manufacturing more efficient<\/strong>. They then offered their buyers products with new and improved designs.<\/strong><\/p>\n

With world-competitive manufacturing and product design<\/strong> in place, they made the shift to their own brand manufacturing<\/strong>. They launched their own brands.<\/p>\n

This is the story of Samsung in microwaves and semiconductors, LG in TV sets, Hyundai in cars and excavators, TSMC in microprocessors, and Acer in laptops.<\/p>\n

As firms like Hyundai, Samsung moved up the OEM to OBM chain, their investment in R&D <\/strong>multiplied. Samsung<\/strong> has consistently ranked among the world\u2019s five largest investors in R&D<\/strong>. It invests $18 billion a year, more than all of India<\/p>\n

What is the way forward to build global brands in India?<\/strong><\/h2>\n

It requires a long-term entrepreneurial outlook<\/strong> with investment in technology<\/strong>. There is a need for building a world-competitive industry<\/strong>.<\/p>\n

Outsourcing<\/strong> should not be discouraged. The current protection though PLI subsidies must continue. At the same time, there is a need to invest strongly in design.<\/strong><\/p>\n

A few giant investors in R&D<\/strong> must emerge in India. The most profitable firms in software, in consumer goods and industrial products are suitable for it. If they are not willing, new entrants to build world-leading firmsbased on investments in technology<\/strong> must be prompted.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source- The post is based on the article \u201cR&D: India’s missing giants\u201d published in the \u201cBusiness Standard\u201d on 23rd March 2023. Syllabus: GS2- Government policies and interventions for development Relevance– Innovation for growth of economy News– The article explains the lack of R&D expenditure in India. It explains the need for global brands in India… Continue reading R&D: India’s missing giants<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,212],"class_list":["post-233890","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-2","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701267087},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/233890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=233890"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/233890\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=233890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=233890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=233890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}