Provision of a weighted tax deduction to organisations donating for research to IITs may boost scientific research.
The Indian Institutes of Technology (IIT) are hopeful. The Budget announcement of a weighted tax deduction on payments for scientific research from 175 per cent to 200 per cent, they say will help them generate more funds for scientific research in the institutes.
The Finance Minister proposed this tax exemption on donations made to — national laboratories, universities and the IITs.
“This is a welcome move. The share of research from industry to academia is growing and this move will certainly give it a fillip. Overall however, government would still be a major source of research and development funds at IITs,” said a senior faculty member from IIT Bombay.
IIT Bombay says of Rs 105 crores that it spent on research, 18 crores came from the industry. Research revenues have grown at the rate of 40 per cent over the past year with the institute clocking revenue of Rs 140 crore in 2010 against Rs 70 crores in 2008.
IIT-B says till over a year ago, it had been filing around 20 patent applications per year, but the number has gone up to 50 patent applications a year now.
IIT Gandhinagar (IIT-Gn) director Sudhir Jain too feels the move will enhance the corporate-academia relationship. “As compared to western countries, research in India has a lot to catch up and that can be done through the collaboration of corporates and academic institutions. The tax benefit will only enhance this area and provide a much needed thrust to more projects being worked upon in tandem by both the sides,” says Jain.
IITs have been working with national and international companies which approach them to consult on various projects. IIT Bombay for instance, has worked with over 700 companies on various research projects.
IITs do not get separate funding for research. Of the plan allocation that the institutes get, it saves a small portion of the same to create research facilities. IITs also generate funds from sponsored research which largely means sponsored projects for government agencies like the department of science and technology, Aeronautics Research and Development Board, Council of Scientific and Industrial Research etc. These projects usually spread over three to five years.
IITs have suggested that the ministry for human resource development provide special grants for creation of research infrastructure. Also, IITs do not have a dedicated staff to help with research. At present, these institutes engage staff in the sponsored projects but their service terminates with completion of the project.
According to Bharat Gulia, senior manager— education sector, Ernst and Young, the move is an effort to bring tax benefits in line with the 200 per cent deduction already available for in-house R&D.
“With 200 per cent weightage deduction now available for both in-house and outsourced R&D, this could boost research work by corporates in the long run. Also, it could be seen more in the newer sectors like telecom, technology and automobiles,” says Gulia.
Auto companies Renault-Nissan are already working with IIT Madras on technology for automobiles and as the company scales up its presence in India, R&D would be an important part of its strategy, it says. Japan’s third largest automaker Nissan Motor Company had last October, signed memorandum of understandings (MoU) with the Indian Institute of Technology, Madras, for comprehensive research in automobile technology.
Renault-Nissan have a plant in Chennai. At the AutoExpo 2010 (in New Delhi), Renault announced its will to introduce a full range in India in a 4 years timeframe.
Hyderabad-based Vasant Chemicals which invests around four per cent of its sales into research, is currently working on several research projects with Hyderabad-based Indian Institute of Chemical Technology (IICT).
“The industry is recognising academic research through increased outsourcing of projects. The overall research climate has been improving. At such a time, the proposal for tax benefits adds as a catalyst to the phenomenon,” Venkat Raman, executive director, Vasant Chemicals. Though the deductions would come in effect from April 2012, Mahindra Satyam’s chief executive officer, CP Gurnani, is of the view that giving tax deductions will not be the only game changer. “Incentives like paying higher grants, payments per patent and better infrastructure are also equally needed to boost scientific research in the country,” adds Gurnani.
