Sarthak Pradhan & Pranay Kotasthane
A few days ago, Apple Inc. established a wholly-owned subsidiary for research and development in India. While the company has conducted R&D in the United States, China, Germany, and Israel, it did not previously have a research base in India. This move is, undoubtedly, a welcome one. However, this initiative should not remain just one of the country’s few major industry R&D initiatives. India needs the private sector to play a much larger role in driving its technological advancement.
Currently, India underperforms in innovation. For instance, the country’s share in high-tech exports in its manufacturing basket is 12 per cent, a low share compared to 23 per cent, 22 per cent, and 39 per cent in respectively. This underperformance is not due to government neglect – government spending is in line with the income levels in the country. The primary concern is India’s in-house industry R&D, which contributes a mere 36.4 per cent to the gross expenditure on R&D, compared to 77 per cent in China and 75 per cent in the US.
Thus, to increase India's technological power, it is crucial to understand why Indian firms fall short in innovation. For instance, it is noted that Indian firms find it difficult to raise resources. Private investment as a share of India's GDP has declined. High tax rates and uncertainty stemming from sources such as lack of precision in the tax code and frequent tax changes act as disincentives for investment. The existing mechanisms to hedge against tax certainty and facilitate investments have not been effective.
No comments:
Post a Comment