The Hindu Business Line : India emerging R&D hub for durables MNCs

For often is the remark, `the product has been developed at our research & development (R&D) facility in India.' But what are the factors that are motivating these companies to set up such facilities here?

"The Indian market is quite peculiar and cost driven. Setting up R&D facilities allows players to introduce products as per consumer demand, besides being cost effective," analysts say. In fact, most of the players depend on extensive market survey on consumer requirements.

Says Ms Radhika Roy, Qualitative Research Head, NFO MBL India: "I do not see this as pure R&D — like it would happen for the pharma industry, but more of product development. The companies innovate in terms of technology, make it cheaper, faster and better. Other areas could be, lightweight material, different levels of cooling; and new techniques of washing etc. To cite an example, Ford Ikon was launched for Indian conditions. A focussed product, tested, with add-ons for India — the same product of course, is now available globally."

According to a Consumer Electronics & TV Manufacturers' Association (CETMA) official, "Any industry requires constant upgradation of its product. And the same stands true for the durables and electronics industry."

A close look at what is prompting the players to set up such facilities in India reveals that most are successfully using the good engineering skills available here, which are also cheap when compared with other places. Besides, setting up of the R&D base is a win-win situation for both the companies as well as the domestic market. Not only does it create more job opportunities, it also customises the product to suit local requirements, industry insiders reveal.

Electrolux Kelvinator Ltd (EKL) has set aside investments up to Rs 3 crore for R&D this year. The company is also in the process of shifting its R&D facility from Butibori (Maharashtra), where it developed the `Washy Talky', the talking washing machine to Shahjahanpur (Rajasthan).

According to Mr Anil Arora, Head Marketing, LG Electronics India Pvt Ltd (LGEIL), "The benefits derived from setting up a R&D base here includes localisation of components, thus saving precious foreign currency."

LG India's in house R&D set up has been recognised by the Directorate of Science & Industrial Research (DSIR).

Meanwhile, Samsung India Electronics Ltd (SIEL), which had set up a R&D (hardware) facility in 2000, has now set up a Software Technology Park (STP) at Noida to develop application software for Samsung's Visual Display Division, part of Digital Media Network Business of Samsung Electronics. The Digital Media Network Business, which contributes around 24.5 per cent of Samsung Electronics' global turnover includes the company's consumer electronics and IT products in its portfolio, states Mr Frank Oh, Vice-President (R&D), Samsung India.

Summing up the present industry trend, ICRA said: "the rapid introduction of new and improved versions of products, combined with the limited penetration levels for the older product versions, has led to them cashing on the different potential markets for all the product versions."

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