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Indian R&D is pumping iron, must make policy choices carefully

The Financial Express
Within tech patent-applications, emerging tech such as AI, internet of things, cloud computing and cybersecurity have steadily increased their share from 38.3% in 2015 to 56.3% in 2017/18. (Representational image)

On many aspects of the R&D ecosystem, India still lags global giants like the US, a handful of European nations and China. But, the indications of a new energy within India and gathering enthusiasm from MNCs in investing in India for work on innovation are strong, and India will likely bridge a significant part of the gap with the R&D giants of today in the coming years. Between 2015 and 2018, a Nasscom analysis reveals, India-domiciled countries filed 4,610 patent applications in the US, and in 2017/2018, technology-related applications (chiefly in computer technology, communications technology and emerging tech like AI, machine-learning, etc) significantly outnumbered non-tech ones (mostly chemicals, pharma and mechanical inventions). Tech-related filings, buoyed by emerging technology, now make for nearly 65% of the patent-mix, up from 51% in 2015. Within tech patent-applications, emerging tech such as AI, internet of things, cloud computing and cybersecurity have steadily increased their share from 38.3% in 2015 to 56.3% in 2017/18. Of 2,536 tech filings in the period, 51.7% are from Indian companies, 24.6% are from international companies, 7.7% from indian start-ups, and 16% from others (academics, universities, academic and research institutions and individuals). Patents have been granted for 42% of the filings, while in 55% cases, the application is alive but pending grant. The intellectual property being created will apply to a breadth of industry segments from software applications to healthcare, from telecom to e-commerce but it is, again, the emerging areas of application (e-commerce, navigation, digital payments, etc) that are driving growth. India, thus, is fast emerging as a hotbed of intellectual-property (IP) creation, with a focus on emerging technologies.

This boost can be traced to the fact that, powered by a maturing start-up ecosystem and the leaps in digital technology development, India is becoming a preferred destination for MNCs to set up global capacity centres (GCCs). This is an evolution in itself from being tech back-offices propped by lower costs and plentiful talent, India is now being seen as an innovation hub. From a mere delivery centre, India is now a value-centre. As per a study by Zinnov Consulting and Nasscom, over 1,250 MNCs now employ a million-plus Indians for R&D work at their India-based GCCs compared to ~1,000 employing 745,000 in FY15. The market size, commensurately, has surged by 45%, from $19.4 billion in 2015 to $28.3 billion in 2018. A watertight testament of this is the fact that India is emerging as the preferred GCC destination for MNCs based in the Asia-Pacific region just Japan and Singapore account for more than 64% of the installed Asia-Pacific based GCCs in India. This vote of confidence in India s talent and policy environment for R&D that too from hi-tech innovation-leaders, in sharp contrast with India s reputation as the Samarqand of jugaad innovation is for India s reinvigorated R&D competence. Another positive that is emerging from India becoming a MNC R&D dark horse is how this is democratising in terms of geopgraphy. While Bengaluru remains the clear favourite with Hyderabad, NCR, Pune and Mumbai trailing for various factors including cost advantages, MNCs are looking towards the shinier Tier 2 cities to set up their GCCs in. So, a Chandigarh, a Vadodara, an Ahmedabad and a Coimbatore are in in the reckoning now. No doubt, there will be significant gains for STEM education infrastructure and local employment in not only these cities but also in their respective states. Having gotten so far, India must make policy choices carefully on, say, education reform, IP protection, infrastructure creation to add to the momentum.