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Khan
National Institute of Science Technology and Development Studies, New Delhi-110012
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The protection provided to the small firms being reduced. Now TNCs are free to decide whether they will use imported or local raw material. Now TNCs are free to use their brand names. Now TNCs can increase the permissible extent for foreign equity from 40 to 51 percent
2005
5.5 72.40 15.10 14.60
Figures in $billion
2006
15.7 70.00 14.80 28.40
2007
24.57 82.70 37.40 27.80
Technology policy statement of 1983, emphasized the need to plan collaboration agreements in ways that would ensure effective transfer of basic knowledge, know-why important inputs to the importing firms for subsequent absorption, adaptation and upgradation of the initially acquired knowledge.
Expenditure on R&D in India 1994-95 1995-96 2005-06 Rs. 6,820 crores Rs. 7,753 crores Rs 20,553 crores
R&D Organization
Organization CSIR ICAR ICMR DBT DRDO DAE ISRO Number 42 89 26 8 52 17 Strength Scientists 10,934 Scientists 6,281 Scientists 3732 Scientists 800 Scientists 6,500 Scientists 5,000 Scientists 10,000
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For success in global market the most important factor is technical skills to produce superior products at competitive rates. Convenient mechanism for technology transfer inside and across countries. Free and flexible movement of R&D personnel. Suitable/appropriate legal framework for facilitating collaborative R&D and dispute settlement.
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Low cost R&D India is the second largest market, therefore, the companies through their products sale earn more than what is spent by them on R&D and their production center in India. India allow foreign investors 100% foreign ownership and full repatriation of capital and profits. India has also accepted the R&D programs under the chapter of trade in services of WTO
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India has large pool of English speaking skilled manpower Indias telecom infrastructure is comparable to that in many countries. Indias geographical location enables 24x7 service offerings. Good regulatory framework.
Emerging Trends
Foreign Direct Investment (FDI) permitted up to 100% through automatic routes. India had agreed to implement a product patent regime with effect from 1st January 2005 as per WTO agreement. MNCs have started strengthening their business in India. They have increased their stakes in existing ventures of set up new wholly owned subsidiaries (e.g. Pfizer)
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Increased focus by Indian Pharma companies on R&D. R&D can be performed in India at 15-20% of the cost in Europe and USA. In dollar terms the cost advantage is about 10-15 times. The Indian companies are pursuing contract manufacturing for supply of bulk drugs/ intermediates for MNCs.
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With low cost of production India has become a base for outsourcing drugs. Indian companies are setting up subsidiaries abroad or seeking strategic alliances to explore tremendous opportunities in the generics market expected in the next 5-10 years.
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Clinical trials cost half or one third of what a developed country does and also takes much less time to complete. Regulations permit testing of new drugs with necessary protective measures.
Software revenues
During 2006-07 the industry grew 28.2% to touch $ 25.9 billion (15.5 billion exports and $ 5.4 billion domestic market). Nasscom estimates software exports and ITES to grow at 30-32% in 2006-07. That would take the industry to $ 30 billion mark, of which export will amount to 25.3 billion.
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US continues to be major market for Indian software services with a share of 70% while Europe accounted for 23.5% in 2006-07. The number of 500 companies that have been outsourcing their requirements has also been steadily growing with as many as 254 outsourcing their requirements from India.
Cont.// The IT industry added over 100,000 jobs in 2006-07, taking total employees in the sector 15,00,000. Last fiscal, ITES-BPO added 165,000 jobs and software and allied services created 140,000 jobs.
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One of the major reasons that Indian software exports is gaining recognition across the world is because of quality certification. Out of 23 SEI-CMM level 5 certified companies world over, 15 are from India. This number is expected to grow as there are several companies that have already reached to level 4. Another encouraging sign is that small office segment of the market has grown by 70% in 2005-06. Besides large corporate market like ERP segment grew by 23%,e-commerce solutions by 300% CAD/CAM market 41% and banking by 70%.
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The number of software exporting companies has grown to a record. At present it is 2,250 and expected to grow to 2660 mark next year. Number of software companies logging exports to Rs 500 crore now stands at 37. The top 100 exporters accounted for 61% of the export resources in 2006-07
CSIRs Performance
Over 50,000 tractors valued over 200 crores have been manufactured based on CSIR know-how. Petroleum refining processes and novel catalyst developed by CSIR in association with consulting engineering design organizations and industry have enabled India to emerge as one of the few major technology licensors in the world in this high tech field A whole range of pesticides with low residual effects developed by the chemical groups of CSIR laboratories are being manufactured by a number of private sector units
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The productivity in number of sugar mills has been significantly enhanced by the use of instrumentation system developed by CSIR Appropriate leather processing techniques developed and popularize by CSIR have enabled India to emerge as an exporter of value added finished goods. High level capabilities in CSIR for testing and design of aircraft have enabled safety evaluation and enhancement in operational life of aircraft.
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Successes Our ancestors were compulsive observer They new how to draw inferences They learnt from trials and errors Failures Lack of tradition of reasoning and questioning Unable to remove urban poverty as well as rural
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What we should do: Strengthen scientific cooperation of Global scale. Enhance network between industry and research and industrial application.
China Vs India
Attribute China India _______________________________________________ Population (in billion) 1.3 1.03 literacy rate 82% 54% Area 9.6 bn sq km 3.3 bn sq km Total GDP $ 1 trillion 500 bn GDP growth (CAGR) 10% 6% Per capita GDP $ 735 $ 495 Total exports (in bn) $ 249 $47 Share in world trade 3.4% 0.8%
China Vs India
IT industry figures Calendar 2006 2006 _____________________________________________________ IT spending as % of GDP 1.10% 1.68% IT industry turnover $46.1 bn $ 12 bn Hardware exports $ 26.4 bn $ 0.4bn Software exports $ 1.2bn $25bn Installed PC base 22 million 7 million PC Penetration/1000 13.2 3.5 Internet user base 22.5 million 3.5 million International Bandwidth 7.5 Gbps 1 Gbps Telephone lines 175 million 34.5 million Telephone lines/100 8.6 3.4 Mobile phones 136 million 5.7 million
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Some of the top companies had obtained CMM certification, a large number of middle level companies had not even heard it. Lack of comfort with English language and the cultural confusion that comes with it made Chinas software industry immature. India has at least five year lead in software outsourcing. India has surpassed Ireland as the prime outsourcing destination of the world. The Indian companies have won a reputation of low cost high quality software delivery.
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Path navigating capability
Planned management Fitting into changes in environment Joint R&D activities
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Semiconductor export is the largest item in electronics export From $ 7.8 billion in 1993 to $ 11 billion in1994 During the seventies electronics exports CAAGR was 43% while for other sectors CAAGR Was 35.6%