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HYDERABAD, March 19

THAT Indian companies still shy away from investing significantly in research and development (R&D), perhaps might not be new.

But, what is quite alarming is that 86 per cent of the country's joint stock companies, out of the total of 8,334 have reported zero spend on R&D in their annual reports for the year 2001-02.

Even among the relatively big investors on R&D, there are only seven Indian firms which spend more than Rs 50 crore per year, while there are about 463 companies spending less than Rs 1 crore , according to a study done by the Hyderabad-based, Administrative Staff College of India (ASCI) on `R&D in India'.

Of the 8,334 firms only 644 have shown active involvement in R&D, while the rest of the industries totalling 7,690 have not reported that they are carrying out any major R&D activity.

Throwing up these statistics, the ASCI study said these firms will not be able to face global competition without any product development capability.

On the positive side, the study pointed out three areas - pharmaceuticals, automobiles and software - where Indian industry has started responding to global challenges and upped investments on R&D.

And in the toppers list in R&D spends, the Hyderabad-based, Dr Reddy's Laboratories Ltd is number one, followed by Tata Engineering, the automobile giant, and Bharat Heavy Electricals Ltd, the public sector utility major.

Incidentally, these three sectors are also witnessing intense competition between transnational and Indian companies.

However, the Indian firms' spends on R&D continue to be considerably lower than their global competitors as a percentage of their sales turnovers, the shows study done by Dr B. Bowonder, Dean Research at ASCI, and Dr G.N. Satish and Dr V. Kelkar, Advisor to the Union Finance Minister.

Among the top 10 companies spending on R&D figure, Reliance Industries, Ranbaxy Laboratories, Oil & Natural Gas Corporation (ONGC), Mahindra & Mahindra, ITI Ltd, Steel Authority of India Ltd and Bharat Electronics Ltd.

The study has found that the private sector firms have started hiking the R&D spending and the thrust is also on accelerated new product development, which would help in enhancing their competitiveness in the global arena.

It pointed out the cases of Dr Reddy's Laboratories and Ranbaxy, which not only appear high on the list of R&D spenders but have licensed molecules to global pharmaceutical firms for clinical trials.

In the case of Government funded R&D also, there is noticeable change.

The broad pattern shows that a major chunk goes into mission mode projects in areas like space, ocean development, atomic energy and defence. Defence sector continues to garner maximum funds with 60 per cent of the total R&D allocation.

Multi-agency projects like the Integrated Guided Missile Development Programme, Light Combat Aircraft, Main Battle Tank account for substantial funds.

There is a diminishing factor on industrial R&D with the belief that the corporate sector has to take up the responsibility.

The low levels of R&D will certainly affect industrial competitiveness of India vis-à-vis countries such as Taiwan, Singapore, Israel and Korea.

The ASCI study pointed out that a perceptible change in Government R&D is that the mission-oriented projects are replacing the open-ended research programmes.

This will induce demand pull innovations. Government R&D is become more result oriented and is promoting networked, consortia research.

The Study concluded that going by the trends of post economic liberalisation, it is clear that as competition has increased new product activities by firms that have a strong intention of remaining competitive have shown an increase.

If Indian industry has to become competitive, it has to raise the R&D expenditure and focus on new product creation.

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