Indian Auto Sector Lagging Due to Insufficient R&D Investment: NITI Aayog Report

New Delhi, Apr 19 (KNN) A new report from NITI Aayog highlights that India’s automotive industry is being held back by inadequate research and development spending.

Despite being one of the world’s largest automotive markets, Indian companies’ R&D investments fall significantly short compared to global competitors.

The government think tank’s report reveals that major Indian automakers spend only 2-3 per cent of their revenue on R&D, while international manufacturers invest 5-12 per cent. .

This disparity has created a dependency on foreign technology and limited India’s ability to develop indigenous advanced automotive solutions.

NITI Aayog emphasises that increasing R&D spending is crucial for India to compete globally, especially as the industry transitions to electric and connected vehicles.

The report suggests that collaborative research between companies, academic institutions, and the government could help overcome financial constraints.

The study also points out that while India has made progress in automotive manufacturing, it continues to rely heavily on imported components and technology transfers from global partners.

This dependence makes the sector vulnerable to international supply chain disruptions and restricts development of India-specific innovations.

The report recommends policy interventions including tax incentives for R&D investments, development of technology hubs, and targeted funding for strategic technologies. It also calls for greater industry-academia partnerships to foster innovation.

Industry experts have responded by acknowledging the challenge while pointing to high costs and uncertain returns as barriers to increased R&D spending.

However, they agree that more investment is essential for India to establish itself as not just a manufacturing hub but also a center for automotive innovation.

The government has indicated it will review the recommendations as part of its strategy to strengthen India’s position in the global automotive value chain.

(KNN Bureau)

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