Indian Autos Rev Up R&D, But Trail Global Giants In Innovation Race: Report

A recent report by FAST India (Foundation for Advancing Science and Technology) in collaboration with IIFL Securities reveals a story of both progress and disparity in the R&D landscape of the Indian Automobile and Components sector. While domestic giants like Mahindra & Mahindra are upping their investment in research and development, a wide gap remains compared to their international counterparts.

The report sheds light on several key metrics. One is R&D intensity, which measures the percentage of a company's revenue dedicated to research and development. Here, global giants like Ferrari lead the pack with a staggering 15.2% R&D intensity, a whopping three times higher than the average Indian firm. Even within India, Mahindra & Mahindra stands out with a commendable 5.7% R&D intensity, almost double the investment of other domestic players.

Another crucial aspect is the talent pool. The report highlights a significant gap in the proportion of PhD-qualified employees between Indian and global firms, with a 3x advantage leaning towards international companies. Interestingly, TVS Motors breaks the mold, ranking third overall in terms of PhD employee ratio, showcasing a strong focus on highly skilled personnel. However, a concerning trend emerges within the low-revenue cluster of Indian firms, where many lack even a single PhD employee.

Innovation output is another area where the gap widens. Measured by publications and patents, global firms continue to dominate. While Ferrari maintains its pole position in publications per revenue, Indian companies like TVS Motors and MRF manage to secure impressive rankings alongside global giants. This highlights the potential of some Indian firms to compete on the innovation front. However, the patent picture remains bleak. Here, Indian firms fall behind by a staggering 30x in terms of patents generated per billion USD revenue compared to their global counterparts.

The FAST India report serves as a wake-up call for the Indian automobile industry. While domestic players are making strides in R&D intensity and talent acquisition, significant progress is needed to bridge the innovation gap with global giants.

Needless to say, increased investment in R&D, attracting and retaining top scientific talent, and fostering a culture of innovation are crucial steps towards propelling the Indian auto industry onto the global stage as a leader.