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A Review of R&D and Sectoral Incentives in Manufacturing in Industrialised and Emerging Economies: Lessons for ‘Make in India’

Published in 2018

Abstract: This paper explores fiscal instruments for promoting firm level R&D across the BICS (BRICS minus Russia) and six selected countries as well as the European Union (EU). The selected countries (apart from the BICS and EU) are Germany, Japan, Malaysia, Republic of Korea, Thailand, and the United State of America (USA). The selected countries represent a mix of early industrialised and newly industrialised economies. Technologica capabilities in industrialised nations are driven by firm level innovations, often encouraged through government policies and fiscal incentives.  In this paper, contributions of such policies for sectoral competitiveness in manufacturing in the countries have been reviewed. The focus is on the Medium and High Tech (MHT) industries. This paper proposes to draw lessons in policy making on the sectoral R&D incentives for Indian manufacturing to facilitate innovation
driven competitiveness akin to the early industrialised countries of the West and the newly industrialised nations of Asia; besides strengthening MHT manufacturing in India, like the emerging economy peers, notably China.