Pattern of Innovation and R&D in Select Sectors by Listed and Other Companies of India

Innovation behaviors of listed firms are likely to be different from business enterprises that are not listed, such as privately held family firms. The listing entitles a firm access to supposedly cheaper capital market. Listing also makes it obligatory on the part of companies to divulge performance and investment data beyond what accounting standards require. This probe is based on much of such data provided by listed companies as also by other companies and as provided by the Prowess database of the Centre for Monitoring Indian Economy (CMIE). Most stock exchanges globally and Indian exchanges too have either proved indifferent to or sometimes even hostile to expenditure on R&D. Therefore, a company would choose between the following options: (1) report on R&D to gain in tax savings or the company perhaps does not require to raise money from capital market; (2) de-risk the listed company by hiving off the vehicle that would undertake R&D; (3) not report on R&D and forego tax gains but invest in developmental projects; or (4) not undertake R&D or no major developmental project. Perhaps most important would be - what defines R&D expenditure? In fact very often firms abroad classify activities of a not strictly R&D type under this head in order to gain tax rebates or to secure strategic mileage. Most importantly a large number of firms are busy in innovative development, while not owning a formal R&D set up. In this section, therefore, we would look into reported cases of R&D without looking into issues of business strategies and the non-R&D elements of innovation