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In-house R&D, Importing Technology and R&D Tax Credit on the Productivity of Manufacturing Industry: Evidence from India

Author

Listed:
  • Baiju Pallayil
  • Sunil Kumar Ambrammal
  • Renjith Ramachandran

Abstract

In-house R&D, importing technology and R&D tax credit play different roles in different economies. The role even may change among firms of various technological intensities. Therefore, this study investigates the impact of in-house R&D, importing technology and R&D tax credits on India’s manufacturing firms’ productivity according to their technological intensity. Our results show that R&D and technology imports have a significant and positive impact on productivity in all technologically intense industries. We have further estimated a substitute relationship between R&D and Importing Technology in high-tech, medium–high-tech and medium–low-tech industries. However, the complementarity relationship between R&D and importing technology appears more pronounced in low-tech industries. Further, the R&D tax credit policy positively impacts firm productivity in medium–high-tech, medium–low-tech and low-tech industries. In order to boost productivity, there need to be policies that support R&D, including R&D tax incentives for companies in all technologically intensive industries. JEL Classifications: C23, D24, O31, 032

Suggested Citation

  • Baiju Pallayil & Sunil Kumar Ambrammal & Renjith Ramachandran, 2025. "In-house R&D, Importing Technology and R&D Tax Credit on the Productivity of Manufacturing Industry: Evidence from India," Studies in Microeconomics, , vol. 13(2), pages 207-231, August.
    • Handle: RePEc:sae:miceco:v:13:y:2025:i:2:p:207-231
    DOI: 10.1177/23210222231154056
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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