India's Engineering R&D sector to see $42 bn investment by 2020

Mumbai, Sep 25 (PTI) The country is expected to attract investment of USD 42 billion in engineering R&D by 2020, according to a recent survey. "India is the leading destination for product engineering services with 22 percent market share and total R&D investment expected to grow at a 14 percent CAGR from USD 14.7 billion in FY12 to USD 42 billion by 2020, mainly driven by growing ecosystem of captives, service providers and startups," Zinnov Management Consulting said in its report `Engineering R&D: Advantage India'. According to the report, captive centres are growing in maturity and global significance with core research teams located in the country, co-creating innovations with service providers and playing a decision-making role in global sourcing initiatives. "There has been significant activity in the domestic captive landscape in FY12, with presence of 874 centres as compared to 836 in FY11 and the determining factor for this is that strong focus on emerging nations as target markets across major verticals," Zinnov chief executive Pari Natarajan said in a statement. Further, the report mentioned that engineering services in the country for health care and automotive are growing faster than traditional verticals such as ISV and telecom, at 26 percent and 17 percent CAGR, respectively. "Automotive, health care and industrial verticals are hot sectors that are poised for growth globally and are correspondingly expected to drive future MNC captive centre growth. Further, MNC captive centres are also growing in maturity, with many companies starting their core research teams operating from India," he said. Besides captives, the Indian R&D service providers are strengthening their deep expertise in software product and embedded development, which have applications across verticals, the report said. "The domestic R&D service providers grew at a higher pace at 16 percent CAGR in FY12 than captive centers, which grew at 11 percent CAGR. They are also working closely with the ecosystem by engaging startups, universities, global development forums and MNC captives, increasing investment in domain-specific infrastructure and talent, as well as partnering with multinationals in their go-to-market strategy," the report said. While engineering for telecom and ISVs continue to be the mainstays of the Indian service provider landscape, their growth is outpaced by emerging verticals such as medical devices with 26 percent growth and automotive with 17 percent growth, it said. "India is well-poised to contribute to global engineering R&D as the ecosystem of captive centers, service providers and startups, increasingly work together to drive innovation. As relationships mature, service providers and customers will enter into pricing models based on market outcomes," Zinnov manager for consulting Sundararaman Viswanatha said. With emerging nations growing in importance as key markets, MNCs are set to leverage the inherent competencies here to build products for local and global markets, he said. PTI