India attracts USD 24 billion as R&D investment in 2015 from North America and Europe based MNCs

Asia becomes the top region for corporate R&D spend, according to the 2015 Global Innovation 1000 Study, from Strategy&, PwC’s Strategy Consulting Business. 
Report highlights:

•  In 2015, R&D spending by the Global Innovation 1000 increased 5.1% to $680 billion.
• Globalization increasingly becomes the norm , 94% of firms conduct R&D beyond just their home country,
•  Asia has become the top destination for corporate R&D spend in 2015, accounting for 35% of total in-region R&D, including both domestic and imported R&D. This places Asia ahead of North America and Europe, who dropped to third, in a complete reversal from 2007 when Europe was the previous leader.
• The U.S. remains the largest spender of in-country corporate R&D, with in-country (domestic & imported) R&D spend at $145 billion in 2015, up 34% since 2007. Imported R&D spend to the U.S., mostly coming from Europe, in 2015 is $53 billion, up 23% from 2007. Exported R&D spend in 2015 is $121 billion, up 51% from 2007, predominantly going to Asia where previously in 2007 it was going to Europe.
• The three largest industries for R&D Spend in 2015 are computing and electronics (C&E), healthcare and auto. In particular, healthcare is on track to pass C&E as the largest industry by R&D spend by 2019.
• The largest spenders by region have remained the same, but where they spend their R&D has changed . In 2015, almost half of all R&D spend came from North American companies, but only about a third of all R&D was actually done in North America. 
• R&D ( domestic and MNCs) in China increased by 120% (2007 to 2015) to $billion surpassing Japan's R&D spending of $50 billion. India's R&D spend at $28 Billion is higher than Southkorea $ 13 Billion, and Taiwan's $ 6 Billion.
• China’s imports of R&D from multinationals headquartered in other countries were $44 billion in 2015. The U.S. led in exports of R&D to China in 2015, accounting for 39 percent of inflow, followed by Japan (20 percent) and Germany (10 percent). Survey respondents cited proximity to a high-growth market as the top reason for moving R&D to China (71 percent), followed by proximity to key manufacturing sites (59 percent), proximity to key suppliers (54 percent), and lower development costs (53 percent). 
• Total corporate R&D conducted in India increased 115 percent between 2007 and 2015, to $28 billion. The growth was powered by R&D spending from other countries, which grew 116 percent. India, not surprisingly, is the largest global destination for software R&D. Multinationals that have moved R&D to India cite a variety of reasons for the move, and cost is often not the most important. “Our tech center in India gives us an around-the-clock capability to accelerate development work due to the time difference with the U.S'.  “The highest priority was access to technical talent that was in close proximity to regional customers. The fact that some of the labor is lower-cost was nice to have, but not a primary driver".
• USA based MNCs spent 43% of their R&D budget at home, another 15% in India, 15% in China, 9% in UK.

Ramakrishna Karuturi, world's largest producer of rose buds

WEF Entrepreneurship report 2011 includes some non-IT firms, Kuruturi Global is one of the them. 
Karuturi, a mechanical engineer with MBA from the US, founded the company in 1995 as a 100% export-oriented unit in Bangalore.In 1999, he set up an internet auction portal by the name Rose Bazaar.com to derive benefits of weeding out intermediaries through the use of the Internet. The same year, he set up a second production facility for roses near Bangalore taking the total size of his rose farms to 10 hectares. Roses for Valentines Day in 1998 earned him his first million. There was an order to supply 22 tons of roses to Europe, and the Air France flight that was to ship it, got cancelled. There was no flight to the destination after that. he bought up the entire stock that was lying there on the tarmac at a a throwaway price as the sellers were desperate to get rid of it,  drove a truck all the way to Chennai, and finally after some haggling, got all the stuff in a Lufthansa flight. That consignment netted him his first million.in 2003, he took a call. In 2003, he decided to kickstart the next acres of farms in Ethiopia, later acquired Dutch firm Sher Agencies for $69 million. 


As per WEF report, Kuruturi's revenues from Indian operation expanded from $7 million in 2006 to $11 million by 2010, where as revenues from international operation rose from $3 billion to $110 billion for the corresponding period.


This is success with smell of roses.

Tata Steel and ArcelorMittal bet on different Eupropean technologies

ULCOS (Ultra Low CO₂ Steelmaking) is the world's most ambitious R&D initiative to reduce carbon dioxide emissions from steel production by developing new breakthrough technologies.Bothe Tata Steel and Arcelor Mittal are core partners in this consortium funded mostly by EU.

 

Tata Steel and Rio Tinto have signed a licensing  agreement to further support technological and commercial development of the  environmentally friendly direct iron smelting process called HIsarna™. HIsarna (an old Celtic word for iron) is a new technology under development by ULCOS. It is a highly energy efficient ironmaking process based on direct smelting of iron ore fines using a smelt cyclone in combination with a coal-based smelter. All process steps are directly hot-coupled, avoiding energy losses from intermediate treatment of materials and process gases. The HIsarna™ ironmaking process consists of  cyclone pre-reduction technology (CCF), owned by Tata Steel, and bath smelting  technology (HIsmelt) owned by Rio Tinto.   This combination offers excellent opportunities for the collection and  geological storage of CO2, the ability to utilise lower-cost raw  material feeds, and the prospect of energy savings through the elimination of  stages in the ironmaking process that are necessary today.  The technology has the long-term potential  to replace conventional blast furnaces, coke ovens and sinter plants and to  reduce CO2 emissions by more than 50% if combined with Carbon  Capture and Storage (CCS).

 ArcelorMittal is pursuing carbon dioxide (CO2) capture, transport and storage project in the Lorraine region. Following its capture, the CO2 will be transported in a buried pipe to be stored inside geological layers offering the properties and guarantees required for very long term confinement without risk for health or environment. The storage layers under study are saline aquifers at a depth of more than 1,000 meters.

The New Multinationals: perspectives from Spain

The popular model of MNC's global expansion vertically and horizontally is well document.For horizontal expansion, technology and brands are considered pre-requisites. The raise of multinationals from developing nations like India puzzled many. In this book Mauro F. Guille´n and Esteban Garcı´a-Canal , develop a new theory of enablers for new MNCs. The examples were mostly Spanish but might be valid for Indian MNCs too.

The new multinationals from the BRIC countries have made great inroads into the global economy. Among Brazilian firms, Companhia Vale do Rio Doce and Metalu´rgica Gerdau are among the largest firms in mining and steel, Embraer holds with Bombardier of Canada a duopoly in the global regional jet market, and Natura Cosme´ticos has a presence in both Latin America and Europe. Lukoil, Gazprom, and Severstal are among the Russian multinationals, while India boasts an army of firms not only in IT and outsourcing services, in which companies such as Infosys, TCS, and Wipro are among the largest in the world, but also in steel, automobiles, and pharmaceuticals. Chinese firms have erupted with force in global markets not only as exporters but also as foreign investors, and in every industry from mining and oil to chemicals and steel. In electrical appliances and electronics, China boasts three increasingly well-known firms: Haier, Lenovo,and Huawei.

International expansion for new MNCs has become possible due to unique capabilities developed by them in their home country in less than perfect conditions.The process of resource accumulation is dependent on home country characteristics such as:

1. infrastructure gaps created opportunities leading to project execution capabilities- Bharati Telecom, GMR Airports, Adani shipyards.

2. Managing suffocating regulations and red tape became a source of competitive advantage as firms learn to leverage previliged political connection.- Reliance

3. Managing fragmented and relatively low capacities at home made the new MNCs masters in turning around under performing firms in foreign countries- Birla empire. 

4. meeting unconventional needs at home developed expertise in specific niches carried to global niches- pharma generics,frugal innovations. 

5. joint ventures and technology transfer arrangements upgraded engineering skills- Tata Motors. 

6. working with Fortune 500 firms resulted in reputation- IT giants.

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