Just two days to the Budget and the 'Make in India' buzz seems to be reaching a crescendo. While easier FDI norms and better infrastructure continue to be on industry's wish list, a section of India Inc also feels the government should pay attention to spurring more research and development (R&D) within the manufacturing sector. The Make in India campaign is centered on a pretty lofty target - increasing the contribution of manufacturing to 25 percent of GDP by 2022 versus the current 16 percent.
In order to achieve that mark, the manufacturing sector needs to grow by 14 percent every year for the next eight years, a far cry from the current run rate of under 3.5 percent over the last three years. Industry feels a big boost can come from increased R&D activity in the country.
Ketan Dalal, Managing Partner - West, PwC said: “The Indian research and development spend is about 0.8 percent of GDP and research has shown that it needs to go up to about 2.4 percent of GDP, and of course a much larger GDP over the next 10-15 years.”
Industry veterans feel the government needs to give a fillip to research and development. And no, its not tax sops that top the wish list.
According to Pawan Goenka, ED, Mahindra & Mahindra, the most important thing is to be able to create a framework by which we can create large consortiums of companies to work jointly on technology with academic institutions.
The idea of consortiums is not a new one. In the automotive sector in the UK for instance, Tata Motors' subsidiary Jaguar Land Rover last year committed 50 million pounds towards setting up an innovation and education centre in Warwick in partnership with the UK government. India Inc wants the Indian government to also act as facilitator connecting private money with top notch research centers.
At present, companies enjoy a weighted deduction of 200 percent on any sums paid to national laboratories, universities, research centers or in-house R&D facilities. Experts say connecting the private sector with research centers will ensure that India emerges as not just a global manufacturing hub, but also an R&D hub.
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