Companies listed on the Indian stock market spend much less on research and development (R&D). These expenses are only 0.9 percent of their income. While the pharma, telecom and auto sectors are at the forefront of spending on R&D, sectors like IT and energy are far behind. This is stated in the report of the brokerage firm ICICI Securities.
Accordingly, 409 companies listed on the stock exchange raised Rs. 36,000 crore were spent. Which accounts for about 0.9% of their income. In 2017-18, the private sector spends 36.8 per cent on research and development. While government companies spent 45.4 per cent. State companies spent 6.4 per cent on R&D and 6.8 per cent on higher education. Not only that, the expenditure on R&D in the country is quite stable. It is only 0.7% of GDP since 2014.
India spends significantly less on R&D than the world’s emerging economies. According to the report, India spends 2% less on R&D than developed countries. According to analysts, spending on R&D will help the country’s economy and employment. Total Factor Productivity (TFP) has improved with innovation in business. Which helps in increasing the GDP. From this perspective, there is a need to increase spending on R&D in India. At least 3% of earnings in the private sector should be spent, especially to boost TFP. If that happens, India can achieve a growth rate of 8%.
Companies spend only 0.9% on R&D compared to revenue, pharma and auto sector ahead
Globally, countries like Malaysia, Hungary, Italy, New Zealand also spend more on R&D than India. On the other hand, the country’s giant corporates like Reliance Industries Ltd have only 0.8% of its revenue on R&D, i.e. Rs. 25 crore, while Tata Motors has spent 7% (Rs. 31 crore) and Mahindra & Mahindra has spent Rs. 30 crore has been spent on R&D.
India spends two per cent less than developed countries
India spends significantly less on R&D than the world’s emerging economies. According to the report, India spends 2% less on R&D than developed countries. According to analysts, spending on R&D will help the country’s economy and employment.
Sector-based expenditure on R&D
| Sector | Costs |
| Healthcare | 6.8 |
| Telecom | 3.3 |
| Automobile | 2.7 |
| IT | 0.6 |
| Consumer | 0.4 |
| Energy | 0.2 |
| Metal, metal products | 0.2 |
Top country spending on R&D
| Country | Costs |
| Israel | 4.5 |
| Japan | 3.4 |
| Germany | 2.9 |
| America | 2.7 |
| France | 2.3 |
| China | 2 |
| Britain | 1.2 |
| Brazil | 1.2 |
| Russia | 1.1 |
| India | 0.7 |
