New Delhi, September 22 (IANS). Union Finance Minister Nirmala Sitharaman on Tuesday called on Indian industry to focus on building innovative, strong, well-governed and globally competitive companies rather than just increasing business size. He said that the next phase of India's development should be quality based and for this the corporate sector will have to invest more in Research and Development (R&D).
Addressing an event of the All India Management Association (AIMA), the Finance Minister said companies should increase spending on R&D either in-house or through partnerships with academic institutions. This will spur innovation, improve products and create more Intellectual Property (IP) in India.
He said, “Our ambition should not be limited to just ‘Made in India’ but ‘Imagined in India’, in which products are not only manufactured here, but also conceived, designed and technologically developed here and then delivered to the world markets.
Sitharaman said India's gross R&D expenditure (GERD) is currently only 0.83 per cent of GDP, which is much lower than the average of OECD countries at 2.7 per cent, China at 2.6 per cent and the US at 3.5 per cent. He said the private sector's R&D contribution in India is only 36 per cent, whereas in developed economies it is more than 70 per cent.
The Finance Minister said that moving forward in the direction of 'Developed India 2047', the success of Indian management will be measured on the basis of how many quality companies and institutions are being created today.
He also stressed the need to make management education more practical. He said that short and useful courses should be prepared for startup founders and early employees on topics like recruitment, delegating responsibility, financial discipline, customer management, compliance and developing organizational structure.
Sitharaman also called for special programs for family-based businesses. He said that training should be provided on subjects like succession planning, corporate governance, professional management, dispute resolution and division of responsibilities.
The Finance Minister also asked companies not to limit themselves to developing products only for urban and high income group consumers. He said that the real basis of India's consumption is crores of families engaged in agriculture, rural construction, transport and unorganized sector.
“If corporate India focuses only on urban premium consumers, the structural strength of growth may be weakened,” he said.
Emphasizing on corporate governance, Sitharaman appealed to the industry to maintain constructive dialogue with the government and regulators. He said that instead of immediately turning every difference into a legal dispute, efforts should be made to find a solution through dialogue and consultation.
He said businesses should adopt a culture of transparency, predictability and dialogue, as in a mature economy disagreement should not mean conflict.
–IANS
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