Lack of R&D incentives for Domestic Companies in Telecom PLI

 SITARA has written to PMO on this:

RECOMMENDATIONS

 For this we request the following:

1.      We are not asking for a withdrawal of the scheme, as some employment benefits are perceived under it, we are only asking for an Addendum which gives strong incentives for domestic companies investing in R&D including manpower accounted as per Indian accounting standard.

2.      To prevent foreign OEMs from availing of the benefits under R&D for assembly operations and IPR which is not Indian, even if the bulk of their R&D is done in captive R&D centres in India with no spillover into the domestic ecosystem, it must be specified that R&D benefits will go only to companies headquartered in India/ owning IPR registered in India and the worldwide profit made on these IPR must be accrued in India only. As of now R&D is capped to only 15% of the investment. Creating Indian IPR should be mandatory as it will ensure the “Indian-ness” of even MNC companies in addition to their low value-addition activities in India.

3.      Also, the companies that can avail of the scheme have been limited to 10 for MSME and 10 for domestic and global firms, of which only 3 are reserved for domestic, leading to the danger that a few  companies will monopolise the benefits. Hence the addendum must also remove the cap of 10 successful companies in each MSME and non-MSME category respectively from 10 – and extend it to all eligible candidates. In addition, to ensure fairness and prevent just one applicant from getting the entire amount, there should be a cap on the maximum subsidy amount given to any single applicant.

Incentives for local manufacture of batteries- Indian policy Vs European poicy

 Production subsidy- India

The government of India has earmarked Rs 18,100 crore as approved financial outlay for implementing the PLI scheme in the Advance Chemistry Cell (ACC) Battery vertical. NITI Aayog and Department of Heavy Industries has been made the implementing agency for the same. Subject to Clause 11.5, 11.6, 11.7 and 11.8, , the Beneficiary Firm shall be entitled to avail the Subsidy in accordance with this Agreement for a period of 10 (ten) years from the Appointed Date.Notwithstanding anything contained herein, the cumulative Subsidy payable by the Government to the Beneficiary Firm during the Term of this Agreement, shall not exceed INR 1,420 crore (Rupees one thousand and four hundred and twenty crores) per GWh.

R&D subsidy-Europe

Plan to develop local capability was more elaborate and layered in Europe.  The European Battery Alliance (EBA) was launched in 2017 by the European Commission, EU countries, industry, and the scientific community. 

This was followed by 1st round of 3.2 billion funding in 2019.The European Commission has approved under EU State aid rules an Important Project of Common European interest (“IPCEI”) jointly notified by Belgium, Finland, France, Germany, Italy, Poland and Sweden to support research and innovation in the common European priority area of batteries.

2nd round of 2.9 billion public support was announce in 2021. The project, called “European Battery Innovation” was jointly prepared and notified by Austria, Belgium, Croatia, Finland, France, Germany, Greece, Italy, Poland, Slovakia, Spain and Sweden. The twelve Member States will provide up to €2.9 billion in funding in the coming years. The public funding is expected to unlock an additional €9 billion in private investments, i.e. more than three times the public support. The project will cover the entire battery value chain from extraction of raw materials, design and manufacturing of battery cells and packs, and finally the recycling and disposal in a circular economy, with a strong focus on sustainability.

FDI in R&D in India-Reji K. Joseph, Biswajit Dhar & Akoijam Amitkumar Singh

How much foreign direct investment is taking place in R&D in India? 
MNCs using Indian talent for research but innovation comes out of development in other countries!!!
Is DSIR recognition relevant?

Interesting aspects highlighed in this paper.
1.RDFDI inflows into India during the period of analysis (2004-16)  was Rs. 54862.6 Mn. This constitutes 0.4 per cent of total FDI inflows into India.
2. RDFDI was concentrated in four sectors—ICT, natural sciences and engineering (NSE), pharmaceuticals and clinical research, which accounted for more than 80 per cent of total RDFDI.
3. Only one‐fourth of RDFDI has come to DSIR recognised firms. None of the firms in the ICT sector, which received the maximum RDFDI inflows, has DSIR recognised in‐house R&D units.
4.The share of FDI companies in corporate sector R&D is only 3 per cent.
5. Data collected from USPTO on number of patents granted in which India is an inventor country and assignee country shows that there is a growing trend of companies based in foreign countries taking patent on the outputs of R&D conducted in India. Since 2002, there has been a steady decline in the share of India based inventions receiving India as the assignee country status. Of late, only 15 per cent of the patents granted by USPTO in which India is mentioned as an inventor country, having India as the assignee country; this share was 58 per cent in 2002. 

WTO does not allow state subsidy in R&D but every nation is spending more on R&D

Global R&D Funding Forecast 2017

Highlights of the report:

• Global (116 countries) R&D investments will increase by 3.4% in 2017 to $2.066 trillion.
• More than 115 countries having significant R&D investments (more than $100 million)
• USA tops the list with 25.5%, followed by China 20.8%, Japan 8.4%, Germany 5.4%, South Korea 4.1% and India 3.8%.
• India spends more on R&D than, U.k, France, Sweden, Denmark,Russia, Australia, Israel, Canada etc.
• In the U.S., two-thirds of all of its R&D is invested and performed by industrial organizations.  Industries in Europe and Asia similarly support and perform between 50% and 75% of their countries’ total R&D. Industry is what drives the majority of global R&D throughout the world. 
• An analysis of the ICT industry reveals that global ICT R&D will increase by 5.1% in 2017 to $218.3 billion, while the U.S. component of those R&D investments will increase at a similar 5.1% to $122.2 billion in 2017.

• USA technological leader in all areas except automotive, where Japan is the leader and USA runner-up. China is runner-up in Computing/IT and ICT.
• INDIA’s 2017 R&D spending is expected to be $77.5 billion resulting in a global R&D total share of about 3.7%. 
• India has one of the largest public research systems in the world. Funding for R&D in these higher education sectors is larger than in France and nearly equals that of Japan. However, these universities are not considered world-class and have a weaker scientific and engineering publication record than other emerging economies such as Brazil, China and South Africa. 
• India has been very successful at attracting foreign R&D investments in a number of categories, including electronics and information technologies. Research studies found that India attracted about a third of nearly 200 engineering R&D (ER&D) centers created in 2015. The enterprises setting up these ER&D centers included the likes of Rolls-Royce, Ericsson, BASF, Bosch, Michelin, Foxconn and LeEco. India now has more than 1,000 ER&D centers. 

Source: R&D Magazine.