India's share to Global ER&D sourcing to rise to 22% by 2030: Report

India's Engineering Research and Development (ER&D) sector is expected to contribute 22 per cent to the Global ER&D sourcing market by FY30 as against 17 per cent in the current financial year, says a recent report. Further, the country's share in the global business ER&D sourcing is projected to rise from $44-45 billion in FY23E to $130-170 billion by FY30.

According to the Nasscom - BCG Report titled "Seizing the ER&D Advantage: Frontiers for 2030," three key sectors - Software, Automation and Semiconductors, are expected to contribute more than 60 per cent of India's share of global Engineering Research and Development sourcing. The share of semiconductor ER&D sourcing alone is expected to see the highest jump from 9 per cent in FY23E to 12 per cent, to become the third-highest contributing sector by FY30.

"India's position in the global ER&D sourcing arena is truly unique, driven by our remarkable combination of ER&D innovation expertise, and ability to provide scalable talent. As we navigate the transformative megatrends in this space, collaboration among government, industry, and academia becomes pivotal. Together, we need to establish robust infrastructure, craft effective policies, enhance ER&D skill sets, and provide industry-tailored training, thereby ensuring employability and the highest quality of research, boosting India’s position as the ER&D hub for the world," said KS Viswanathan, Vice President (Industry Initiative) at Nasscom.

Worldwide, ER&D spending is likely to grow at a rate of 8-9 per cent CAGR from 2023 to 2030 due to stability in the market and emphasis on digital innovation worldwide, states the report. The spending for the same, during 2022-23, stood around 7-8 per cent CAGR.

The study anticipates digital engineering to be the main factor behind an increased ER&D spending across the globe, accounting for approximately 65 per cent in 2030, up from 45 per cent in 2023. In India, the software sector will continue to retain the highest share of sourcing followed by the automotive sector, according to the report. Additionally, the report suggests that the industry may find additional growth opportunities within the segment, particularly with support from sectors like aerospace and defence, telecommunications, energy, and utilities, etc.

"India will play an increasingly important role on the global ER&D arena by helping drive next-gen ER&D agenda across sectors – key ER&D accelerators for India include Automotive (xEV, Connected Vehicles, and Infotainment); Energy, Utilities, Oil and Gas (Climate and Sustainability, and Digital Operations) and MedTech (Remote Patient Monitoring Devices and Advanced Imaging)," said Amit Kumar, Managing Director and Partner, BCG.