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Wednesday, March 19, 2014

Survey on Foreign Collaboration in Indian Industry: 2007-2010

The RBI survey captures comprehensive information relating to the nature, pattern, and operations of Indian companies having technical collaboration with foreign companies valid during the period April 2007 to March 2010.Highlights of the survey:

Drop in pure technical collaboration.
  • Out of the 158 companies which had entered into foreign technical collaboration agreements during the period 2007-08 to 2009-10, 129 were subsidiaries, 19 were associates having equity participation and 10 had pure technical collaboration (PTCC).
  • Out of 678 companies which has entered into foreign non-technical collaboration (equity only) , 543 were subsidies and 92 associates. 
  • Patents transferred as part of agreement stood at 5 in 8th survey compared to 3 in seventh survey.

This was on expected lines as with liberalization, Indian partner is not a condition for operating in India. MNCs discovered that doing business in India is easier with professional managers than rent seeking Indian business partner.

Impact on Economy
  • The total value of production reported by the foreign collaboration companies covered in the present survey increased from `604.8 billion in 2007-08 to `822.4 billion in 2009-10. As a percentage of GDP these companies contributed 1.3% of GDP. 
  • The number of employees in the responding foreign collaboration companies increased from 62,166 in 2007-08 to 71,268 in 2010.
  • Total exports of the foreign collaboration companies covered in the present survey increased from `120.7 billion in 2007-08 to `156.7 billion in 2009-10.Total imports made by the foreign collaboration companies covered in the present survey increased from `275.0 billion in 2007-08 to `342.3 billion in 2008-09 but declined to `299.0 billion in 2009-10.
  • R&D intensity measured as the ratio of R&D expenditure to the value of production declined for both manufacturing as well as service sector from 1.55 in 2007-08 to 0.83 in 2009-10.

  • Foreign Collaboration has negligible impact on GDP, employment, exports or R&D. Strange, considering the fact that India needs better technology in all sectors. 
  • Direct import of technology goods seem more attractive than even local assembly with FC.
  • Unlike China, Indian govt had no strategic vision of technology acquisition. While China made heavy payments for patents & technology and became global leader in  areas like High Speed Rail transport, Batteries etc, India every year routinely transfers large payments to Suzuki, Unilever etc as royalty(!).

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