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Prospects of FDI-Driven R&D—A Comparison Between Indian and Foreign Pharmaceutical Firms

In: Achieving $5 Trillion Economy of India

Author

Listed:
  • J. C. Sharmiladevi

    (Symbiosis Centre for Management Studies, Symbiosis International (Deemed University))

Abstract

It is now an acknowledged and well-researched fact that foreign direct investment facilitates and enhances development of underdeveloped and developing economies. Multinational companies have also understood that with FDI, they can do more business than any other form of internationalization. India has proved to be as one of the attractive destinations for research and development (R&D). R&D FDI in India is increasing, but, at the same time, this increase is not matching with core R&D activities. Non-core R&D activates dominate 50% inflow of R&D, as most of these activities get tax concession from the government. R&D FDI is mainly made to take benefits, tax concessions from the government, which dilutes the desired benefits and spillover effects of FDI. An attempt is made in this chapter to check whether the foreign companies are going in tune with Indian companies in creating more R&D. Data is taken from pharmaceuticals companies, where the R&D intensity is very high. R&D and innovative potentials of foreign and Indian companies are compared from their balance sheet data. Results indicate that Indian owned companies are investing more towards R&D, than foreign owned companies, which is a highly encouraging phenomenon considering the current demand for innovation .

Suggested Citation

  • J. C. Sharmiladevi, 2022. "Prospects of FDI-Driven R&D—A Comparison Between Indian and Foreign Pharmaceutical Firms," Springer Proceedings in Business and Economics, in: Arti Chandani & Rajiv Divekar & J. K. Nayak (ed.), Achieving $5 Trillion Economy of India, pages 21-41, Springer.
    • Handle: RePEc:spr:prbchp:978-981-16-7818-9_2
    DOI: 10.1007/978-981-16-7818-9_2
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