Lupin, Tata Motors lead in R&D spending

While Indian pharmaceutical companies and infotech companies are leading India Inc in research and development (R&D) expenses and patent applications, but a majority of local companies are lagging global peers in R&D spending.

According to statistics of the stock exchanges, pharmaceutical firm, Lupin spent the most in R&D as percentage of its net sales (8.9 per cent), Tata Motors spent the maximum in value terms (Rs 2,200 crore) in the financial year 2015.

On Wednesday, the Tata group announced it had spent Rs 17,896 crore on R&D across companies in financial year 2015, which was 2.7 per cent of the group's turnover. Analysts said while pharmaceutical companies are spending more on R&D to find new drugs to stay ahead in the game, Indian companies like Infosys are spending around 0.3 per cent of their net sales in R&D - which is not enough when compared to their global peers.

Take for example, Microsoft R&D's expenditure was $12 billion in 2015 - 13 per cent of its revenues. No wonder, Microsoft is a leader among technology companies in pursuing patents and currently has a portfolio of about 57,000 US and international patents issued and about 35,000 pending, as per its annual report of 2015. Similarly, tech giant Apple spent a staggering $8.3 billion in R&D expenditure of three per cent of its net sales in 2015.

Infosys Chief Executive Officer Vishal Sikka had said in the past that Infosys will spend more in R&D and innovations and take its budget to Rs 1,500 crore ($250 million).

"We are bringing innovation into our existing projects though our Zero Distance programme which has now reached 100 per cent coverage. Zero Distance is the effort we launched last year to bring innovation into every projects; to inspire teams to not just do what they are told, but to go beyond that and do something innovative," said Sikka, after announcing the FY16 results.

In FY15, Infosys spent only Rs 150 crore in R&D (see chart). Infosys's rival, TCS spent Rs 225 crore in R&D efforts in the same year and is betting big on its neural automation platform, Ignio which has won 14 multi-million dollar deals in FY16. During the post results conference with analysts, Tata Consultancy Services management highlighted that most products in the market are in robotic process automation which simply automates all tasks. The goal is to enhance Ignio into software that can practically offer all services.

India's largest private sector company, Reliance Industries spent only Rs 1,220 crore or 0.3 per cent on R&D - indicating low investments in innovations in FY15. In FY15, RIL was granted total 22 patents, in which, three for India, and 10 for USA, two for China, and one each for South Korea, Indonesia, Taiwan, Nigeria and Poland.