The ‘Make in India’ initiative has played a pivotal role in expanding India’s manufacturing capacity, attracting significant investments across several industries. In sectors like manufacturing, infrastructure, and technology, this initiative seeks to draw foreign businesses and investment into India.
The government has taken several steps to streamline regulatory procedures and reduce bureaucratic red tape. It has helped India receive diversified FDI inflows. India is becoming a global manufacturing hub for foreign investment.
Commerce ministry data shows manufacturing sector’s foreign direct investment (FDI) equity inflow surged 76% to $21.34 billion in FY 2021-22 from $12.09 billion in FY2020-21. Another trend is post-covid FDI rising 23% between March 2020 and March 2022.
The economy of India has benefited from the growth in FDI in several ways, including the creation of jobs, the improvement of infrastructure, the transfer of technology, and increased industry competitiveness. It also shows how desirable India is as a location for foreign investment.
Post-covid, FDI rose 23% between March 2020 and March 2022. The influx of FDI has bolstered India’s economy, creating jobs, improving infrastructure, transferring technology, and enhancing industry competitiveness, affirming India’s attractiveness for foreign investment.
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Despite global pandemics and geopolitical unrest, FDI has established the tone of India’s growth story. However, FDI cannot tell the entire story of India’s growth; therefore, we must consider a few additional indicators, such as the knowledge economy and technological progress to understand the stability and sustainability of future growth. We can certainly go a long way with increased FDI and the Make in India initiative. Still, we would need a solid technological foundation, such as R&D in the primary alternative energy sector and the high-end technology sector, to realize the Prime Minister’svision of 2047.
As business and manufacturing landscape changes, there might be a greater understanding of the value of intellectual property protection, particularly patents. Because of this awareness, more companies may decide to protect their inventions with patents.
Foreign businesses regularly transfer technology and intellectual property to their Indian partners or subsidiaries as part of their investments in India. As these companies attempt to safeguard their innovations and intellectual property in the host country, this technology transfer may increase patent filings in India. Between 2014–15 and 2020–21, India’s non-resident patent filings will expand at an average annual rate of 1.08%. This growth is estimated to be between 4% and 6% for 2018-19 and 2019-20, respectively (Annual Report, 2020).
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Some companies in India’s highest patent filing rates include Samsung Electronics, Qualcomm, Huawei Technologies, Oppo, Microsoft, Koninklijke Philips, and Honda Motor. These companies are pioneers in numerous innovation- and technology-driven sectors, and their presence in India’s patent landscape indicates their commitment to safeguarding their intellectual property.
Their patent filings in India protect their intellectual property and strengthen India’s ecosystem for innovation and technological advancement by facilitating collaboration with local businesses and institutions and fostering the exchange of knowledge. Foreign companies registering for patents frequently contribute cutting-edge inventions and technologies in India. Local Indian enterprises were given access to this technology through partnerships, licensing deals, or knowledge-sharing agreements, which improved their knowledge bases. However, one of the most concerning aspects of this figure is that no Indian companies are among the top ten patent filers. The top ten applicants in the patent corporation treaty (PCT) and the India filing are foreign companies (Patentscope database).
In line with the initiative’s focus on promoting domestic production, multinational corporations have increasingly engaged in research and development activities within India. The average growth rate of research and development (R&D) expenditure by foreign enterprises in India from 2015 to 2020 was approximately 7%. This figure indicates a consistent commitment to conducting R&D activities within the country. The observed rise of 20% in R&D investments during the year 2019 indicates substantial growth, which can be attributed to various factors such as emerging market opportunities, advancements within the industry, or changes in the competitive environment. R&D investments frequently result in job creation and the development of a robust innovation ecosystem in a country. It increases competitiveness by encouraging domestic firms to improve their R&D and scale up their product.
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To ensure a resilient and sustainable industrial environment, three indicators need close monitoring: FDI inflow into the green sector, Indian firms’ R&D expenditure across industries, and the global presence of Indian products. There are several boxes that India has already checked at the start of this decade, including overcoming the pandemic, increased FDI post-pandemic, and improving its global innovation ranking to 40th in 2022.
(Madan Dhanora is assistant professor, Institute for Excellence in Higher Education, Bhopal, India. Mohd Shadab Danish, assistant professor in Economics and Public Policy at IIM Raipur and Niranjan Shastri, associate professor – finance at School of Business Management, SVKM’s Narsee Monjee Institute of Management Studies (NMIMS)Deemed-to-be-University,Indore, India)
