India Inc continues to cut down on research and development (R&D) expenditure despite the potential benefits from it and the well-predicted threat from liberalisation. While spreading wings globally and getting the multinational stamp is now the ‘in’ thing for many Indian companies, R&D spending as a whole grew slower than the sales amount. In fact, R&D spending as a percentage of net sales continued to shrink. In 2006-07, 251 big firms’ ratio of R&D to net sales was down to 0.66 per cent, from 0.68 per cent in the previous year. In absolute terms, aggregate net sales income of 251 firms, however, rose 25.4 per cent from Rs 7,51,722 crore in 2005-06 to Rs 9,42,659 crore in 2006-07. R&D expenditure rose 21 per cent, from Rs 5,129 crore in 2005-06 to Rs 6,206 crore in 2006-07.Automobile major Tata Motors led in R&D spending with Rs 796.86 crore, as it forged ahead with new strategies of designing and developing its vehicle brands. After Tata Motors, in the top 10 were Ranbaxy Labs (Rs 483.82 crore), Dr Reddy’s Labs (Rs 292.80 crore), BHEL (Rs 253 crore), Sun Pharma (Rs 188.27 crore), Cipla (Rs 175.73 crore), Mahindra & Mahindra (Rs 170 crore), Infosys Techno (Rs 167 crore), Ashok Leyland (Rs 156.40 crore) and Cadila Health (Rs 156 crore). As expected, companies in knowledge-based sectors such as pharmaceuticals and IT spent the largest share of their net sales on R&D. Six of the 10 companies with the highest R&D to net sales ratio are from the pharmaceuticals sector. The remaining companies in the list are players from the economy-software, other chemicals and biotechnology companies. Among the sectors analysed, significant increases in R&D expenditure during 2006-07 were registered by textiles (192.1 per cent), electric equipment (75.9 per cent), paper (55 per cent), fertilisers (49.4 per cent), automobiles (48.5 per cent), pesticides (34.7 per cent), steel (29.5 per cent), IT (21.6 per cent) and Pharmaceuticals (9.9 per cent). The total R&D expenditure of 37 pharmaceutical companies increased from Rs 2,226 crore in 2005-06 to Rs 2,447 crore in 2006-07. On the other hand, a decline in R&D expenditure was seen in the case of food & food products (48.1 per cent), personal care(23.7 per cent), telecommunications(16.8 per cent), auto ancillaries (8.5 per cent) and refineries (8 per cent).
