Advantage R&D

Updated: Mar 25 2004, 05:30am hrs
As a pointer to a growing trend, The Financial Express frontpaged a story that Procter and Gamble India is seeking to grab a major chunk of its parents global R&D spend of $1.67 billion.

Scarcely a day passes without similar announcements by other MNCs who plan to source their R&D requirements out of this country. Alcatel, for instance, wants to step up its research activities here, besides China and East Europe.

The US-based networking major Cisco has recently opened a lab in Bangalore. Yet another story published in this newspaper is that GE Caps is betting on high-end knowledge process outsourcing and is beefing up its presence in this regard.

All of this underscores Indias comparative advantage in knowledge power, which is contrary to widespread perceptions that it is only in cheap labour.

MNCs naturally have adapted to this situation with alacrity to exploit Indias large pool of scientific and technical manpower.

Gone are the days when they centralised R&D activities in their home country. True, there were good reasons for that.

In the pharmaceutical industry, for instance, there was a need to protect research from being reverse engineered in economies with lax intellectual property rights regimes.

But the transition to the trade-related IPR agreement by WTO members is a factor of change which is encouraging big pharma to source some of its R&D from countries like India.

Indias R&D advantage is, in fact, substantial and is reflected in the fact that 100 out of the Fortune 500 companies have set up facilities here in recent times.

For instance, 70 MNCs like Delphi, General Electric, Hewlett Packard, Heinz and Daimler Chrysler have set up research facilities over the last five years alone.

A good number of these are automobile-related which is a spin-off from the sheer presence of 13 global auto giants with a 1.2 million production capacity who are fiercely competing for the 850,000-strong annual passenger car market in this country.

Not only are they setting shop here, as it were, the point to note is that they are also rapidly scaling up their R&D activities. The various writings of the Union IT minister Arun Shourie in The Indian Express thus has indicated that just four years ago Intel had only four persons working in India.

Today, it is over 1,000. GEs Jack Welch Technology Centre in Bangalore employs 1,600 researchers and is the largest facility of the company outside the US.

Monsanto, which has been in India for over 50 years, decided to set up its first non-US R&D facility in Bangalore in 1998 to serve Asia as a whole. Indias R&D advantage thus is strengthening by the day.