Budget should boost R&D: CII

The Confederation of Indian Industry (CII) wants the next Budget to provide boost to research and development (R&D) initiatives in the economy. “Our spending on R&D at less than 1 per cent of GDP compares unfavourably with 3-4 per cent in advanced countries. Indian Industry aspires to be at the forefront of innovation and research and development and CII believes that the country has the potential to be one of the countries with the highest levels of embedded intelligence in its products and services. Therefore,we must make every effort to double the percentage spend on research and development over the next few years,which would be possible only by enhancing the participation of private sector,” said CII Director General Chandrajit Banerjee.

Emphasising the need for increasing the share of research and development expenditure in the economy,CII among various measures has suggested the extension in period as well as scope of Section 35 of the Income Tax Act,which allows weighted deduction of 200 per cent of expenses incurred on in-house research and development to select sectors,and expires on 31 st March 2012.

Further,CII has observed that the current provisions of deduction under Section 35 even for select industries are very restrictive as some of the activities directly related to research,such as clinical trials held on patients outside the hospitals,bio-equivalence studies,regulatory and patent approvals etc,are outside the purview of the benefits.

CII has,therefore,recommended that all activities related to research,even if they are carried outside the approved research and development facility,should be covered under the provision.

Banerjee added that India has the potential to emerge as the global hub for research,innovation and design if we could strengthen the incentives for research and development activity in the country.