India emerges as a key engineering R&D hub, drawing German firms

India is emerging as a global leader in the Engineering Research and Development (ER&D) space, attracting significant interest from European companies, especially those in Germany.

“We are seeing a massive surge in interest from European companies, especially Germany-based headquartered ones, seeking to understand better how they can tap into the talent diversity, scalability, and cost-effectiveness of service delivery destinations such as India,” Siva Polimetla, Head of Engineering R&D at Nasscom (National Association of Software and Services Companies), in a report by Deloitte and Nasscom on ‘Spotlight on Germany’s evolving ER&D operating model strategy: Tapping into India advantage’.

The report highlights India’s growing role in shaping the future of global ER&D. 

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“As Europe emerges as a key contributor to global R&D spend, accounting for 24 per cent in 2022-23, Germany leads the charge with 36 per cent of the region’s R&D investments,” it said.

The report reveals how German companies, particularly in sectors such as automobiles and industrial engineering, are increasingly turning to India’s mature ER&D ecosystem to boost product innovation, resilience, and speed to market.

“The collaboration between Germany’s engineering expertise and India’s digitally skilled workforce underscores a growing interdependence aimed at addressing global challenges and driving innovation,” the report said.

Of the 1,700 operational GCCs that India houses now, more than 1,680 have ER&D services. A sizeable percentage of the global top 50 engineering service providers is headquartered in India.

“The ER&D segment grew by 8 per cent CAGR over the past four years, the fastest-growing and the second-largest segment in the Indian tech industry,” Keerthi Kumar, Partner, Deloitte India, said.

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