The Centre should push the private sector to invest in R&D and hold it accountable, Sridhar Vembu, cofounder and chief scientist of software firm Zoho, said Friday, ahead of the upcoming Budget.
He said the combination of the 'carrot and stick' approach could do the trick to supercharge such investment in the country.
"I really want our government to give a strong push to private sector R&D investment (in the Budget)," he said on the sidelines of an event announcing the launch of Zoho's ERP (enterprise resource planning) suite. "The private sector has to invest in R&D, not the public sector. The government is (already) investing, but the private sector has to match the R&D base and the government should hold the private sector's feet to the fire."
He said that it was imperative for companies to invest in metallurgy, drones, medical equipment and other strategic sectors because the talent pool and capital exists in abundance in India and infrastructure constraints aren't a bottleneck any longer.
"We need to lift up our investment in R&D massively," Vembu said. "We are at 0.6%-0.7% of GDP in R&D. We need to reach at least 4%, maybe 5%-6%. And that's not just a numerical target, it is also a cultural change within the company. From the budgetary pushes, maybe incentives from the tax side or like CSR obligations, a combination of carrot and stick (could work)," Vembu said.
He went on to add that Zoho was investing in sectors like medtech, robotics and chip design. He said the common theme was to build deep tech capabilities.
"We are part of this whole nation building project," he said. "That's a civilizational project, that is a multi-decade project. This could be 20-25 years, but we are committed to stay the course."
GCCs & intellectual property
Commenting on the explosive growth of global capability centers (GCCs) in India, Vembu said that while it means high paying jobs coming to India and building capabilities locally, he said the intellectual property (IP) is created here but belongs elsewhere.
"We supply relatively cheap raw material - brain power - and we export that raw material and then we import the finished product by value," he explained. "That's exactly the colonial economics where we exported raw cotton and then we imported the finished manufactured goods. That is concerning. The government has to study this problem. The IP should be registered here. The profit should be booked here. A good chunk of value addition should be booked here."
He said that India should use its leverage and demand more because the demographics dictate that companies cannot avoid India today. Vembu added that he believed that the government was waking up to this and should put more pressure on these firms to ensure that the IP is also registered in India.
Chennai-headquartered Zoho on Friday launched Zoho ERP, a comprehensive enterprise resource planning solution for Indian businesses, at Kumbakonam in Tamil Nadu. The company said that a part of the team building the product operates out of the company's regional office in Kumbakonam and that as the product scales and is rolled out globally, the company will continue to hire local talent to support its growth.
“With Zoho ERP, we have built a powerful, compliance-ready platform that serves as a strong homegrown alternative to global ERP solutions," Shailesh Davey, CEO, Zoho Corp said in a statement. "This product, requiring deep-tech R&D, has been developed with the support of talent from Kumbakonam, and its future growth will also be driven from here. We have replicated our Tenkasi model successfully here."
The company is exploring building a larger campus in Kumbakonam soon to keep pace with the growth. Further, Vembu said that Zoho is looking at a foray in North India too this year - taking its hub and spoke model across the country.
He said the combination of the 'carrot and stick' approach could do the trick to supercharge such investment in the country.
"I really want our government to give a strong push to private sector R&D investment (in the Budget)," he said on the sidelines of an event announcing the launch of Zoho's ERP (enterprise resource planning) suite. "The private sector has to invest in R&D, not the public sector. The government is (already) investing, but the private sector has to match the R&D base and the government should hold the private sector's feet to the fire."
He said that it was imperative for companies to invest in metallurgy, drones, medical equipment and other strategic sectors because the talent pool and capital exists in abundance in India and infrastructure constraints aren't a bottleneck any longer.
"We need to lift up our investment in R&D massively," Vembu said. "We are at 0.6%-0.7% of GDP in R&D. We need to reach at least 4%, maybe 5%-6%. And that's not just a numerical target, it is also a cultural change within the company. From the budgetary pushes, maybe incentives from the tax side or like CSR obligations, a combination of carrot and stick (could work)," Vembu said.
He went on to add that Zoho was investing in sectors like medtech, robotics and chip design. He said the common theme was to build deep tech capabilities.
"We are part of this whole nation building project," he said. "That's a civilizational project, that is a multi-decade project. This could be 20-25 years, but we are committed to stay the course."
GCCs & intellectual property
Commenting on the explosive growth of global capability centers (GCCs) in India, Vembu said that while it means high paying jobs coming to India and building capabilities locally, he said the intellectual property (IP) is created here but belongs elsewhere.
"We supply relatively cheap raw material - brain power - and we export that raw material and then we import the finished product by value," he explained. "That's exactly the colonial economics where we exported raw cotton and then we imported the finished manufactured goods. That is concerning. The government has to study this problem. The IP should be registered here. The profit should be booked here. A good chunk of value addition should be booked here."
He said that India should use its leverage and demand more because the demographics dictate that companies cannot avoid India today. Vembu added that he believed that the government was waking up to this and should put more pressure on these firms to ensure that the IP is also registered in India.
Chennai-headquartered Zoho on Friday launched Zoho ERP, a comprehensive enterprise resource planning solution for Indian businesses, at Kumbakonam in Tamil Nadu. The company said that a part of the team building the product operates out of the company's regional office in Kumbakonam and that as the product scales and is rolled out globally, the company will continue to hire local talent to support its growth.
“With Zoho ERP, we have built a powerful, compliance-ready platform that serves as a strong homegrown alternative to global ERP solutions," Shailesh Davey, CEO, Zoho Corp said in a statement. "This product, requiring deep-tech R&D, has been developed with the support of talent from Kumbakonam, and its future growth will also be driven from here. We have replicated our Tenkasi model successfully here."
The company is exploring building a larger campus in Kumbakonam soon to keep pace with the growth. Further, Vembu said that Zoho is looking at a foray in North India too this year - taking its hub and spoke model across the country.