Assessment of R%D and its impact on Indian manufacturing industries

An important source of productivity growth, technological change and hence increased welfare of a country is Research and Development (R%D). Thus, it is absolutely important to develop a country's R%D sector. However, developing countries have traditionally relied largely on import of technologies from developed countries, rather than domestic R%D for driving their technological change. India too has been no exception. But, like any other developing country, India too needs to make continuous investment either to adopt foreign technology or to develop its own capacities via R%D activities. Presently, India's R%D expenditure is merely 2.1% of total global expenditure. Against this backdrop, the present study computes elasticity of industry-level TPF with respect to R%D content of intermediates, both domestic and foreign, for industries in India. The results show that R%D stocks embodied in intermediates have contributed to productivity growth in these industries. Particularly, noteworthy is this elasticity for low-R%D industries, like, processed food, textile and wearing apparels, motor vehicles etc.