More mncs are relying on indian expertise for their R&D, design, and technology. so what do indians bring to the table?
By Team MT
Union information technology minister, Ravi Shankar Prasad, last month, announced setting up a 220-acre mega electronic systems design and manufacturing cluster in Assam. He said that the Ministry of Electronics & IT, government of India, will set up a comprehensive mega Electronic Systems Design & Manufacturing cluster as a one-stop destination for IT and manufacturing industries investing in Assam. This is just the beginning of the government’s stress on building capacities of design, R&D and technology centres.
For a long time, Indian manufacturing companies relied on foreign consultants to design intricate products. MNCs too preferred to source design from its parent company, and instead confined India’s role to purely manufacturing. But much of that is now changing.
In a just-released report by research firm Zinnov, proving that high-skilled Indian talent remains much in demand, as many as 25 more global companies have established R&D centres in India since the beginning of 2012. This takes the total number of MNC R&D centres in India to about 1,031. Among those who have entered in the past 18 months are Groupon, Unilever, Expedia, Panasonic, Ricoh, Royal DSM, Abbott, and Sigma-Aldrich.
These MNC captive centres in India, combined with Indian providers of engineering R&D outsourcing, account for about 23% of the overall global engineering R&D outsourcing market. This makes India by far the largest provider of such outsourcing services.
TITANS OF INNOVATION
Design or R&D centres are not new to India. Every large and mid-level Indian manufacturing company, with a long term plan to stay in business, will have invested in such centres. Those companies that are required to regularly bring out new products are known to invest 2-5% of their revenue in R&D centres. Last month, PTC and L&T Technology Services Limited announced the opening of a Centre of Excellence (CoE) focused on Industrial Internet of Things (IoT) innovation at LTTS’ office in Bengaluru. Popularly termed as Industry 4.0, the Industrial IoT Center of Excellence will demonstrate the promise of digital transformations for companies across the globe, and will showcase the technologies that make those transformations possible. “This will be a valuable way to show new and existing customers the potential for their digital transformations,” said Amit Chadha, president, sales & business development & whole-time director, L&T Technology Services. “To maximiee the potential of the space, we needed proven technology, and PTC was the clear choice with its established solution offerings and robust Industrial IoT platform that complement our unique offerings in digital PLM.”
Engineering centres support a company’s business in R&D programmes, product development and project management as they mostly involve data analysis and computer-aided engineering. Explaining his bid to leverage India’s engineering prowess, Kishore Jayaraman, president, Rolls Royce, India & South Asia, says, “The engine test bed located at Rolls-Royce Power Systems’ Pune site provides engineers the ability to conduct performance testing on new engines designed at the centre. With a growing engineering footprint in India, we are keen to support India’s indigenisation ambitions by collaborating with strategic partners in the country.” His company is looking at establishing a robust ecosystem that will engage in co-creation across the entire value-chain, from research, design and development to manufacturing, maintenance and repair.
Research & development plays a huge role in business growth. But there are a number of challenges involved in such activities. Besides long timescales, there are always uncertainties about whether the product will meet the original brief and customer requirements. Then there are difficulties in anticipating how conditions will change in the market and whether customer needs will change during the long R&D process. Competitors may come up with a rival product that is just as effective.
It is for this reason that JK Tyre & Industries believes in working very closely with its OEM so as to be sure that its efforts are not wasted. AK Makkar, manufacturing director, says, “The R&D of tyres has two parts. One is the shape and the other is the material used. We have divided our R&D into material R&D, which develops the new raw materials and the compound development and the final application of the tyre as a composite. Here we look at tyre attributes such as vibration handling, rolling resistances, fuel efficiencies and all these are developed with vehicle testing.”
Besides these, there are developments related to the polymer fillers such as chemicals. These are done with dynamic analysers, which throw up the product attributes through testing. Designing a tyre also helps the company to understand the noise generation, the comfort it will provide, and the handling it will give on the vehicle. The rate of wear is also taken into account. “As an integral part of an automotive group, when we design a tyre, we ensure that the OEM has delivered the vehicle to us for which the tyre is to be designed. The vehicle limits the tyre outer dimension as to what will fit. It also depends on where the vehicle will be used. Then there are the profiles. One can have multiple profiles with the same dimension. It’s in profiling that our expertise comes in that helps us to judge the profile that will offer the best resistance and NVH (noise, vibration and harshness). Once the profiles are finalised then it is just a matter of putting the material into the profile,” adds Makkar.
IF IN DOUBT, INNOVATE
Businesses can gain considerable benefits from investing in design centres and R&D. One advantage is unique products. Companies can build competitive advantage through R&D by bringing innovative products to the market. It would also help to understand that once a product has been developed, it can generate a strong stream of profits for many years. Ongoing research also leads to new opportunities – researchers cannot always anticipate what the results of their research will be. Often chance discoveries open up whole new channels of research. Engaging in research also helps to build the brand.
When Nissan India inaugurated its design centre in Chennai, the company announced that it wwuld be an independent centre with designers coming in from Japan. However, the company also said that it would recruit Indian designers to be trained in the Nissan way. The move is a clear reflection of the Japanese automaker’s intent to grow its presence here rapidly in the coming years. Its global ally, Renault, also has a design centre in Chennai with a smaller outfit based in Mumbai. Chennai is home to the Renault-Nissan manufacturing alliance and the location makes sense for the design operations too, since people here will be closely involved with their R&D counterparts. Unlike Renault which has had two successful products in the form of the Duster and Kwid, Nissan still has not been able to get a breakthrough offering in place yet.
Another German auto component manufacturer, ZF Friedrichshafen AG, inaugurated its first technology centre in India in Hyderabad, Telangana, two months ago. The company has also announced an investment of €15 million over the next five years in India. The new technology centre, ZF ITC, will focus on bringing advanced technology to India as well as localising more strategic business activities including research, design and development for global market initiatives. It will be dedicated to electronics, embedded software and mechanical engineering.
Mamatha Chamarthi, chief digital officer of ZF, said, “The centre will be rapidly integrated into the engineering ecosystem of ZF and become a pillar of innovation for the company. As demand for software engineering grows, ZF will exponentially increase capacity to help meet customers’ growth aspirations in both the global and local market.”
In all this, the government too has launched a new scheme namely financial support to MSMEs in ZED Certification Scheme. This is one way to encourage them to develop quality products and zero defect manufacturing.