The Telegraph
Since 1st March, 1999
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Research hubs sprout minus scan
- No track of Foreign firms exploiting Indian talent: Study

New Delhi, Feb. 14: Foreign research and development (R&D) centres in India employ nearly 23,000 Indian scientists and represent $2.3 billion worth of research services, but no one is tracking their activities, a new report released today has said.

The report on foreign direct investment in R&D services investigated the top 100 foreign companies with R&D centres in India and found that the US has the largest footprint, accounting for 53 companies and a workforce of 15,000 scientists.

German, Korean, French and Japanese companies have also set up R&D centres that are exploiting Indian talent, according to the report sponsored by the government’s Technology Information Forecasting and Assessment Council (TIFAC).

“India’s big attraction has been its talented but low-cost human resources,” said Arun Goyal, the director of the Academy of Business Studies that prepared the report. “The slow-down of 1999-2000 also pushed companies to India to cut costs.”

The cost of a scientist in India is $10,000 per year, compared to $100,000 a company would have to pay a scientist in the US or Europe to get equivalent research done, the report said.

The R&D activities cover diverse sectors, including software and hardware design, automobile design, chemicals, drug discovery and pharmaceuticals, wireless and aerospace research.

Senior Indian scientists have cautioned that while the entry of foreign R&D provides employment and investment, its long-term impact on the development of indigenous technology is unclear.

“If this drains our best scientific brains, from where are our own technology development programmes going to get talented people'” asked a top scientist involved in a strategic technology programme.

The intellectual property generated through such R&D services is retained by the foreign company. “We need to ensure that this outflow of talent does not hurt India,” Dr R. Chidambaram, the principal scientific adviser to the government, said.

The TIFAC report has said there is no reporting system for R&D export services after the initial approval from the RBI. Once the RBI and state government approvals for land acquisition are done, there is no government agency to monitor or oversee the working of the unit, the report said.

It has recommended that the director-general of foreign trade should establish a registry of FDI in R&D. The registry should compile data on such parameters as areas of investment, the number of scientific personnel employed and the value of exports.

Most of the R&D centres operate out of Bangalore, but Delhi and Mumbai have also emerged as attractive sites for these companies, the report said. While many companies start out as partnerships with local firms, these partnerships don’t last.

More than half of the foreign firms surveyed preferred to work alone in India with 100 per cent foreign equity, without local partners.

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