The report urges India to monitor the effects of foreign R&D investment on national development

USAID

[NEW DELHI] India attracts major foreign investment in research and development (R&D) but has no system for assessing how this affects the country's technological development, warned an official report on Tuesday (14 February).

The report, by the government's Technology Information Forecasting and Assessment Council (TIFAC), urges India to monitor the impacts of this investment, such as the jobs and export revenues it generates.

The government must also assess how effectively the technologies developed by foreign companies are transferred to India's public sector, it adds.

The report is based on a survey of the 100 biggest foreign companies with R&D centres in India. Together they employ about 23,000 researchers.

"Individuals employed in the R&D centres may be better off, but it is not clear whether the country as a whole is better off," says TIFAC's executive director Anand Patwardhan. "We need to look at the bigger picture."

The report points out that after India's central bank and the relevant state government have approved a foreign company's plan to start a unit in India, no government agency monitors the unit's work.

The report is the first to analyse foreign direct investment in R&D. It says more than US$1.1 billion flowed into the sector between 1998 and 2003.

US-based companies invested more than 70 per cent of the total, followed by South Korea, Germany, Denmark and the United Kingdom.

The report says that a major reason for this investment is that employing a US-based researcher is ten times more expensive than employing one in India.

The main sector to benefit is information technology, with investment also increasing in molecular chemistry (including drug research), biotechnology (including crop breeding), and engineering design.

"The survey is just a beginning," says Rajagopala Chidambaram, the government's top science advisor and chair of TIFAC. "The government needs to study the data in detail and decide on a future course of action."