The Madras Chamber of Commerce and Industry (MCCI) organised a conference on R&D as an engine for growth of Tamil Nadu. The participation of the Tamil Nadu ministers of finance and industry, renowned economist Raghuram Rajan, a member of the TN Economic Advisory Council and Additional Chief Secretary-Industry, S Krishnan, lent a good deal of weight. Naveen Unni, Managing Partner, McKinsey & Co, Chennai, presented the theme paper. There were panel discussions with representatives from three industrial units and a professor from IIT-Madras.
The policymakers and the renowned economist were content to stress the obvious, the importance of research for development and the need for the state to enhance its R&D feasibility.
Until 1991, in the era of permit-licence and quota, understandably, there was limited attention to R&D. Research spend and commitment came largely from Defence and other government institutions like the CSIR, ICAR, ISRO and a few pharma companies which focused on reverse engineering of profitable branded drugs. There was also a commitment for R&D by large public sector undertakings like BHEL and SAIL that set up separate divisions for R&D with modest allocations.
Difficulty to select project for R&D
There was the difficulty of selecting projects for R&D; mostly it was concentrated on process and product improvements and to funding extended by external agencies.
Government for its part provided tax incentives. These attracted a few companies. In Chennai, I remember MRF getting its Rubber Research Centre inaugurated by Prime Minister Jawaharlal Nehru in 1963; but little is heard since, except the company’s handsome record in grooming pace bowlers for the Indian cricket team. Under M K Raju, India Pistons set up a research centre. One hasn’t heard much on its impact over decades.
Post liberalisation in 1991, several Indian companies stepped up research efforts. With the rush of renowned multinationals from the east and west setting up shop in India, vehicle makers Ashok Leyland, Mahindra & Mahindra, Tatas and TVS Motors focused on research to good effect. The pharma industry through its research efforts, has helped India emerge the pharmacy of the world.
Like an academic Naveen Unni, in his presentation, started with the definition and criteria of R&D, with data on the number of R&D institutions in Tamil Nadu (751 at the last count) and R&D spend of 9.5 per cent of India’s (it was Rs 668 crore in 2018). He suggested the state prioritising the sectors for R&D spend, creating the right framework and regulatory environment for accessing funds. Material sciences, software product deve-lopment, IOT capability, life sciences and auto engineering were the areas he cited as among the candidates for R&D.
Poor commitment to research
IE has been pointing to the poor commitment of resources for R&D by most private companies. Cement, chemical, fertilizer and oil companies spend next to nothing on R&D.
For decades leading companies in developed countries have routinely been committing 6-10 per cent and more of their revenues on R&D. We provide the modest R&D spend of a few companies of the state, which needs to be expanded.
The IIT Research Park, Saint Gobain, Daimler, CSIR/CLRI, Ashok Leyland, Mahindra & Mahindra, TVS Motors are among the prominent R&D spenders in the state. Saint Gobain draws upon the academic, undergrad and research students of IIT-M at its global research centre on building materials for humid and hot climates located at the IIT-M Research Park.
It’s a good augury that senior policymakers of Tamil Nadu participated in this conference. There is a lot of scope for the state government to facilitate the work done by Central institutions like IIT-M and CSIR. The Anna University and dozens of other technology and educational institutions in the state could be helped to work with these. There is also need to focus on governance issues to facilitate R&D.
