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Deloitte-NASSCOM Report on India’s Role in Driving ER&D Innovation

Germany spearheads EU R&D spending growth with ~36% share in Europe; future opportunities for Indian Engineering R&D GCCs and service provider ecosystem: Deloitte-Nasscom report.

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Deloitte-NASSCOM Report on India’s Role in Driving ER&D Innovation

Deloitte-NASSCOM Report on India’s Role in Driving ER&D; Innovation

As global businesses adapt to shifting geopolitical and economic conditions, India has established itself as a critical centre for engineering research and development (ER&D). A joint report by Deloitte and NASSCOM, titled “Spotlight on Germany’s evolving ER&D operating model strategy: Tapping into India's advantage,” underscores India’s increasing influence in shaping the future of global ER&D. The country is transitioning from providing traditional support functions to leading digital transformation and innovation across industries worldwide.

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Germany’s Growing Collaboration with India

Europe accounts for 24 percent of global R&D spending in FY23, with Germany contributing 36 percent of the region’s investments. The report highlights how German companies, particularly in the automotive and industrial engineering sectors, are leveraging India’s mature ER&D ecosystem to enhance product innovation, resilience, and speed to market. This collaboration combines Germany’s engineering expertise with India’s digitally skilled workforce, fostering a partnership aimed at addressing global challenges and driving innovation.

India’s ER&D Ecosystem and Global Leadership

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India has developed a robust ER&D ecosystem, solidifying its position as a global leader in the field. The country hosts over 1,700 Global Capability Centers (GCCs), with more than 1,680 offering ER&D services. A significant portion of the world’s top 50 engineering service providers are headquartered in India. Additionally, India is home to 91 active unicorns and a thriving tech start-up community of over 31,000 companies. The country is also advancing technologies such as generative AI, spatial computing, and the industrial metaverse.

Initiatives Strengthening India’s Innovation Capabilities

India’s innovation capabilities are further bolstered by initiatives like MeghrajAI and IndiaAI, as well as academic partnerships with institutions such as IIT Bombay and IISc Bangalore. These efforts reinforce India’s status as a global innovation hub and a strategic partner for businesses shaping the future of ER&D.

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Keerthi Kumar, Partner, Deloitte India, said, “India’s engineering R&D segment has come a long way bolstered through a robust ecosystem comprising the world’s largest GCC base, leading engineering service providers (ESPs), the third-largest and burgeoning start-up community, and globally renowned academic institutions. These forces have consistently been moving the needle for the ecosystem from being a doer and collaborator to becoming a creator and owner, primarily around market-shaping dimensions such as digital engineering, autonomous and connected systems, and more importantly, sustainability. This is naturally reflected in the 8 percent CAGR over the past four years for India’s ER&D segment, the fastest-growing and second-largest segment in the Indian tech industry, and more noticeably, the 55.4 percent growth contribution for the net tech exports the country witnessed between 2023 and 2024.”

Siva Polimetla, Head, of Engineering R&D, NASSCOM, said, “India’s rapid emergence as a global ER&D leader is being driven by its unmatched talent pool and its ability to spearhead cutting-edge innovations. The growing synergy between GCCs, ESPs, and start-ups in India is fuelling growth in high-impact sectors such as AI, the metaverse, and spatial computing. These areas are not only shaping the future of product development but are also strengthening India’s position as the go-to destination for digital engineering and innovation—an invaluable partner for global companies, particularly those in Europe, looking to stay ahead of the curve in today’s technology-driven world.”

With advancements in AI, digital engineering, and sustainability, India’s GCCs are shaping the future of global ER&D, using the country’s robust infrastructure, talent pool, and innovative ecosystem to maintain its competitiveness on the global stage.

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