China may pip India in R&D globalisation mkt: Zinnov

According to Zinnov, the current MNC research and development (R&D) globalisation market for India is USD 7.75 billion, while that of China is USD 7.65 billion. "China has evolved as a premier destination for R&D offshoring in the last few decades and is undergoing a paradigm shift like maturity and expansion of work portfolio, transformation and innovation in R&D, rising MNC competition with domestic Chinese firms," Zinnov Management Consulting Manager (Consulting) Praveen Bhadada told reporters here.
The study indicates that the Chinese R&D market is growing at a fast clip and is likely to overtake India soon, he added.

The growth has also been boosted by various technology mandates by the Chinese government and assistance in form of tax benefits and financial incentives.
For example, the study says China plans to invest 2.5 per cent of its GDP in R&D by 2020 from 1.45 per cent in 2006.

Bhadada said some provinces also offered financial incentives to MNCs hiring local people to promote job creation. However, India still retains its advantage of cost arbitrage. While an MNC spends on an average about USD 50,400 per person annually in China, in India the cost comes to USD 39,500.

"India needs to move away from the cost arbitrage factor. Focus needs to be on identifying opportunities for innovation and adding value. Also government needs to play a more proactive role in promoting investment in R&D in the country," he said.

The total talent pool in R&D in India is about 1.96 lakh compared to 1.52 lakh in China. However, fresh talent pool suitable for R&D is 45,000 in India and 56,000 in China, the study said. Bhadada said China is also witnessing rapid expansion of secondary locations as the fast pace of infrastructure development made investment in smaller areas like Shenzhen, Dalian, Wuxi, Nanjing and Chengdu among others offer good opportunities.