Indian Enterprises Outpace Global R&D Growth but Lag in Intensity: FAST Report

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Indian Enterprises Lead Global R&D Growth but Lag in Intensity: FAST Report Analysis

Team Finance Saathi

29/May/2024

Key Points:

1: Indian enterprises achieve 1.2 times the R&D growth of global companies between FY16 and FY23, but lag in R&D intensity across all sectors studied.
2: Indian firms excel in R&D growth in aerospace and defence, automobiles, chemicals, and energy, while global firms lead in pharmaceuticals and software.
3: Indian companies demonstrate higher R&D disclosure scores compared to global counterparts, indicating transparency and accountability in innovation efforts.

In a groundbreaking analysis conducted by the Foundation for Advancing Science and Technology (FAST), Indian enterprises have emerged as frontrunners in global research and development (R&D) growth. The report, spanning from FY16 to FY23, unveils a fascinating narrative of India's prowess in innovation, juxtaposed against areas of improvement.

The study scrutinized the R&D landscape across various sectors, including aerospace and defence, automobiles, chemicals, energy, pharmaceuticals, and software. By meticulously selecting 20 companies from each sector—10 Indian and 10 international—the analysis provided comprehensive insights into the dynamics of innovation and R&D efforts.

One of the most striking revelations from the FAST report is the remarkable R&D growth achieved by Indian firms, surpassing their global counterparts by 1.2 times during the specified timeframe. This surge in innovation underscores India's evolving role as a global innovation hub, showcasing its ability to compete and even outpace established players on the international stage.

However, amid this impressive growth trajectory, Indian enterprises face a significant challenge in R&D intensity, as highlighted by the analysis. R&D intensity, which measures the ratio of R&D investment to revenue, emerged as an area where Indian firms underperformed across all sectors studied. While the growth is commendable, the discrepancy in intensity signals a need for strategic recalibration to ensure sustained innovation impact and competitiveness in the long term.

Delving deeper into sector-specific dynamics, the study unveils intriguing insights into the patterns of R&D growth. Indian firms showcased exceptional performance in sectors such as aerospace and defence, automobiles, chemicals, and energy, where they outpaced global companies. This trend underscores India's burgeoning capabilities in industries crucial for national development and global competitiveness.

Conversely, global firms exhibited dominance in sectors like pharmaceuticals and software, where they demonstrated superior R&D growth. This divergence highlights the nuanced dynamics of innovation ecosystems, influenced by factors ranging from market dynamics to regulatory frameworks and technological advancements.

Moreover, the analysis shed light on the transparency and accountability of innovation efforts, as reflected in R&D disclosures. Indian companies consistently scored higher on R&D disclosures compared to their global counterparts, with an average disclosure score of 6.2 out of 10, showcasing a commitment to transparency and stakeholder engagement in innovation processes.

In conclusion, the FAST report offers a comprehensive panorama of India's evolving innovation landscape, marked by remarkable R&D growth, sector-specific dynamics, and areas of improvement. While Indian enterprises have showcased commendable strides in global R&D growth, addressing the disparity in R&D intensity remains imperative to sustain and enhance India's position as a leading innovation powerhouse on the global stage.

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Indian Enterprises Lead Global R&D Growth but Lag in Intensity: FAST Report Analysis

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