China may pip India in R&D globalisation mkt: Zinnov

By BD Naraynkar

New Delhi, June 8 (PTI) With the Chinese government providing tax benefits and financial incentives, China's R&D globalisation market is likely to overtake India soon, warns Zinnov.

According to Zinnov, the current MNC research and development (R&D) globalisation market for India is USD 7.75 billion, while that of China is USD 7.65 billion.

Zinnov Management Consulting Manager (Consulting) Praveen Bhadada said, "Our study indicates that the Chinese R&D market market is growing at a fast clip and soon is likely to overtake India."

Bhadada said China was providing various tax benefits and financial incentives for MNCs conducting R&D in their country. "Some provinces in China are giving 3,500 yuans per person to MNCs to impart training to freshers," he added.

Bhadada further said China was providing local tax exemptions and giving preferential treatment in terms of granting land and medical help. "It is giving customs duty exemption on imported equipments that are not available in China," he added.

China also plans to invest 2.5 per cent of its GDP in R&D by 2020 from 1.45 per cent in 2006, Bhadada said.

Raising alarm on China's rapid growth rate in investments, Bhadada said investments in China have grown at 15.9 per cent in last three years despite recession, whereas investments in India is growing at 10.5 per cent. "In China 1000 MNCs are conducting R&D compared to India which boasts of close to 700 MNCs conducting R&D," he said.

However, India still retains its advantage of cost arbitrage. While an MNC spends on an average about USD 50,400 per person annually in China, in India the cost comes to USD 39,500.

"India needs to move away from the cost arbitrage factor. Focus needs to be on identifying opportunities for innovation and adding value. Also government needs to play a more proactive role in promoting investment in R&D in the country," he said.

The total talent pool in R&D in India is about 1.96 lakh compared to 1.52 lakh in China. However, fresh talent pool suitable for R&D is 45,000 in India and 56,000 in China, the study said.

Bhadada said China is also witnessing rapid expansion of secondary locations as the fast pace of infrastructure development made investment in smaller areas like Shenzhen, Dalian, Wuxi, Nanjing and Chengdu among others offer good opportunities.

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