India’s position overseas, in electronics, hardware, software development, and telecom sector can further strengthen with a greater focus on research and development (R&D) in information and communication technologies (ICTs), says Sandeep Narula, chairman, Electronics and Computer Software Export Promotion Council (ESC).
The R&D in this direction will help the domestic ICT sector in achieving competitive advantage in electronics and other sectors concerned, said Narula. This can encourage domestic manufacturers to scale up production. This will lead to higher production at a lower cost per unit and facilitate exports.
India spends around 0.65 percent of the gross domestic product on R&D. Given the fact that the country is a fast-growing economy, there’s a need to go stronger on this front. Expenditure gauged as a percentage of their individual GDP, South Korea spends 4.3 percent of its GDP, Japan 3.4 percent, Finland 3.2 percent, the USA 2.8 percent, the UK 2.8 percent, and China 2.19 percent. The global spending on R&D, by the corporation and the governments, stands at $1.7 trillion (as of 2019). Interestingly, 10 countries, most of which are economically smaller in size compared to India, account for 80 percent of R&D expenditure.
The recently tabled economic survey in Parliament gave focus to research and development. “It is indicative of the unprecedented focus laid by the government to move in the value chain in every economic segment particularly in the ICT segment,” Narula said.
Relatively, smaller companies stay away from investing in R&D. The reason for this behaviour is the high capital cost of equipment used in R&D which at times is unaffordable. Extending capital subsidy to the equipment and offering tax incentives are measures that can encourage R&D in the ICT segment.
A recent release by the ESC states that creating an enabling framework for R&D investments by the private sector – expeditious patenting, protection of intellectual property rights (IPR), certification, encouraging Indian enterprises to register their patents abroad, and other relevant measures – will encourage R&D activities that in turn can trigger innovations and product improvisations.
