Indian Defence Firms Need More Innovation: HAL Leads in R&D

Indian defence companies are spending less on research and development (R&D) compared to global firms. They only use 1.2% of their revenue for R&D, while the global average is 3.4%. This means they need to invest more in new ideas to keep up with the world.

HAL’s Strong Commitment

Hindustan Aeronautics Limited (HAL) is an exception. HAL spends 9.3% of its revenue on R&D, which is very high. In the year 2022-23, HAL spent USD 301 million on R&D, much more than Bharat Electronics Limited (BEL), which spent USD 130 million.

Other Companies’ Efforts

Bharat Dynamics Limited also does well, spending 6.1% of its revenue on R&D. However, most Indian defence firms are still behind in R&D spending.

Need for More Qualified Employees

Indian defence firms have fewer PhD-qualified employees, with only 0.1% compared to the global average of 0.3%. Companies like Sika Interplant and High Energy Batteries are doing better in this area.

Publications vs. Patents

Indian defence firms are good at publishing academic papers, with 88.5 publications per USD billion revenue, more than double the global average. But they lag in patents, with only 7.3 patents per USD billion revenue, compared to the global average of 240.

Budget and Future Plans

India is the fourth-largest defence spender in the world. The defence budget is growing and is expected to increase by 7% to 8% annually over the next five years. The budget for the Defence Research and Development Organisation (DRDO) has also increased to Rs 23,855 crore for FY24-25.

Despite these efforts, the median R&D intensity for Indian firms is still low at 1.2%. High-revenue firms like Larsen & Toubro (L&T) spend little on R&D, resulting in low R&D intensity. To stay competitive, Indian defence firms need to focus more on innovation and research.