Subir Roy: Indian R&D never had it so good

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On technology, India has never had it so good. All three sectors""foreign, domestic private, and domestic public""are doing the right things, which should pave the way for rapidly upgrading the technological capabilities of the economy.

This was not always so. Till the early eighties a lot of up-to-date technology was simply not available, even if Indian entities were willing to pay for it. For its part, the government was firmly set on achieving self-reliance and this translated into widespread reverse engineering. Then came the partial opening up of the late eighties during Rajiv Gandhi's rule, when technology imports were selectively allowed even as trade barriers were kept high.

This led to a setback on the technology front. The old copying, learning and absorbing were gone, replaced by the attempt to import plant and machinery and make a good margin in the protected domestic market.

The nineties of course changed all that. After overcoming the travails of the initial adjustment process and the post-1995 deceleration, Indian business has not looked back.

Today the scene is fascinating, almost breathtaking. Indian firms are growing fast, thus allowing them to amortise increasing R&D expenditure.

They are also on a rapid cost-effective technology-buying spree, which enables them to bridge their technology gap, without having to reinvent the wheel, before they can afford to have massive R&D budgets of their own, like Korean firms do.

This is being done by buying up small technology-intensive firms all over the world which are available at good value. Nicholas Piramal has acquired a stake in a Canadian biotechnology firm BioSyntech, which specialises in discovery and development to do collaborative research.

Jubilant Organosys has acquired a 100 per cent stake in Target Research Associates, a US-based clinical research organisation, so as to develop both its own clinical research capabilities. More deals are in the pipeline.

Ranbaxy is to acquire a pharma company in the EU with strong research capability and discovery pipeline. Cadila is set to buy an EU-based biotechnology firm.

Brick-and-mortar firms are not far behind. Bharat Forge has acquired a Swedish firm, Imatra Kilsta, after a couple of others, which will enable the Indian leader in automotive forgings to offer its global customers front end support in design, engineering, and technology.

Tata Motors has bought Incat International, an engineering and design services firm in the UK, which services customers in most geographies in auto, aerospace and engineering. Plus, it has entered into a wide-ranging alliance with Fiat, which will, among other things, further joint research and development.

What is most fascinating is the way the government's approach to R&D has changed. Earlier, promoting R&D meant offering tax sops to business (it achieved little) and funding CSIR laboratories. The labs first developed new technology and then sought out buyers, with poor results.

Under the leadership of RA Mashelkar, who has been heading the labs for a decade now, the emphasis has been on involving the private sector in partnership right from the beginning of a project. This gets private investment and the new technology ultimately produced is firmly attuned to market needs.

Mashelkar has a few telling figures to depict the change. In the decade 1995-05, the number of US patents granted to CSIR scientists rose from nine to 196. Then projects were all small, with budgets of less than Rs 20 crore, and run by single labs.

Now there are 40 with budgets of over Rs 20 crore. Now there are 55 major projects involving teamwork by labs. And the number of labs is down from 40 to 38! In 1995 the CSIR's budget was Rs 300 crore; in the current year it is Rs 1,200 crore.

The surplus in the labs' reserve fund, created out of what they earn after meeting expenses, is up from Rs 45 crore to Rs 400 crore over the period. This money the labs can spend on their own, thus aiding autonomy.

The current government mantra, of promoting public-private partnership through innovative techniques, has resulted in the New Millennium Indian Technology Leadership Initiative (Nmitli). Under it now, in four years, 50 private companies and 160 institutions are working together to develop new products. One such project has been to address the needs of bio-informatics startups for very costly software. TCS and 21 institutions teamed up and launched Bio-Suite 18 months ago.

The partnership that can have the most far-reaching impact is a new molecule for the treatment of tuberculosis (the last such molecule in the field came in 1963) developed by Lupin in collaboration with 12 institutions. Currently, 37 such programmes are on.

The government still has an exclusive role, which is now limited to promoting R&D in the pre-competitive stage. One such area is nanotechnology, for which government funding is running at Rs 200 crore. The government's policy is not to supplant industry, but "put industry on speed", says Mashelkar.

Industry's new energy and the government's new thinking have most recently been supplemented by MNCs finding India an attractive platform for locating R&D (the previous column dealt with this).

To realise the full promise of all this, industry and the government need to do only one thing more""keep improving the quality of education.

sub@business-standard.com