Industry body Nasscom seeks govt help for super innovation units

Of the 500-600 companies present in the Indian ER&D space, 45-50% are engineering service providers, and 55-60% are MNCs and global contact centres

Industry body Nasscom has urged the government to support the engineering and R&D (ER&D) industry in making super innovation clusters in India.
 
“These clusters could be dedicated to the development of advanced manufacturing, electric vehicles, telecom- 5G security standards, healthcare, etc. It is necessary to identify a few hotspots in the country where academic research, talent, and start-ups can co-exist and create a holistic model to build India’s innovation capacity. Israel has achieved this, and Canada is trying to emulate the model too,” said K S Viswanathan, vice-president (industry initiatives) at Nasscom.
 
Of the top-2,000 ER&D spenders in the world, about 48 per cent don’t have presence in India and are primarily from North America, Korea, Europe, and Japan.
 
Viswanathan added that the industry was working with the central and state governments to attract more such companies to come to India.
 
Of the 500-600 companies present in the Indian ER&D space, 45-50 per cent are engineering service providers, and 55-60 per cent are global multinational corporations (MNCs) and global contact centres.
 
According to Nasscom’s Strategic Review for FY22, companies such as Acce­nture, DXC Technology and Cap­gemini moved into the ER&D segment last year, while players like Cyient, Onward Techno­logies, VLSI/Chip design firms and medical devices firms shifted focus to greater ER&D.
 
“Engineering products have a direct impact on customers,” said Karthikeyan Natarajan, chief operating officer and executive director at Cyient.

“For example, automotive or aerospace companies build physical products with hardware, mechanical and software components, and customers consider that as their core. But a digital future requires IT and engineering teams to work together and leverage each other and capabilities to create next-generation products and services,” he added.
 
According to Nasscom, India’s share in the global ER&D market is expected to grow at a compound annual growth rate (CAGR) of 12-13 per cent to reach $63 billion by 2025 from $31 billion in 2019.
 
This growth is being driven by global enterprises across automotive, aerospace, consumer electronics, medical devices, industrial and energy, semi-conductor, and telecom sectors.
 
The pandemic resulted in a global dip in ER&D spending. The ER&D global sourcing market in 2020 was $89 billion, 6 per cent less than 2019, primarily due to insourcing and carve-outs.
 
However, with European firms becoming more accepting of the global sourcing model, Indian service providers have begun seeing increasing traction for ER&D deals.
 
Natarajan said the first four to six weeks of the lockdown were challenging for ER&D projects because of plant access restrictions and lab infrastructure, but the industry bounced back.
 
“It was challenging for the first few weeks but the teams recovered brilliantly. Wherever there was a plant interface or testing and validation requirements, projects suffered for a while. But the advantage now is that global teams have confidence in India’s ability to work remotely. We have the unique opportunity to scale our talent pool and bring in structural changes to positively influence more projects to be centred in India,” he added.