How India can produce companies like Apple, Google, Pfizer..., explains Zoho CEO

Zoho CEO Sirdhar Vembu in a Twitter thread has explained as how can India produce globally competitive companies like Apple, Google, Pfizer, Samsung, Honda, Boeing, Siemens, TSMC or Huawei.

In a Tweet, he wrote, “Why are these companies so important to their host nations? Is India on a path to producing these companies? I will explore these questions.”

Explaining as Why are these companies so important to their host nations?, he wrote, “These companies are extremely important to their host nations because they embody within themselves the advanced know-how and R & D capabilities essential for modern life and nationhood. Most critical R & D happens within such companies.”

“These companies enjoy a disproportionate share of economic value added as well as profits (compared to their direct effect on employment) and also pay heavy taxes to their host nations both through their well-compensated employees and directly as corporations. That's the why,” he further explained.

In another tweet, Vembu explained how India can build such companies, he wrote, "Now let me come to the "how". For India to build such companies, Indian private sector must invest in R & D heavily. There is no other way. The government should incentivise and persuade companies to invest in R&D. Industrial R&D is not the same as academic research.

Vembu says if India wants $30 trillion economy, we must invest heavily in private sector R&D.

“The return on private sector R & D investment is enormous. Those aggregated returns from the private sector are what show up as high GDP growth and high GDP per capita. If we want a $30 trillion economy, we must invest heavily in private sector R & D. One point program!,” he wrote.

Further explaining when the private sector invests in R&D, skilled people to staff them will come.

He wrote, “Where will find the skilled people to staff private sector R&D? If we build it, they will come - when the private sector invests in R & D and signals it's deep commitment, talented people stay home. Companies also find ways to create and nurture talent as Zoho has done.”

Vembu also said that on present trajectory, India is not on the path to producing such giant companies as private sector is not investing sufficiently in R&D. But he added that culture and mental habits of being R&D driven companies need to be created.

“Finally, is India on a path to producing such companies? On present trajectory, no. Indian private sector is not investing sufficiently in R&D. We have not created the culture and mental habits of being R&D driven companies. We must build the culture first. Yes we can,” he wrote.

Commenting on his post, One user wrote, “If you leave Pfizer & Google from this list, rest all have one thing in common, their core competency is building excellent hardware. We should focus on building a supportive ecosystem for producing world class Hardware companies.”

Another user wrote, “Adding to your point, We do not have advanced know-how in R&D of Software World. We use software tools of the west, libraries, frameworks, os et cetera. Companies like DeepMind, OpenAI are going making tectonic shift in Software Industry. Agreed, as of now, no.”

Some other wrote, “Great thread, Coming to India, CEOs view company as money making machine, they are not taking risk to invest in R&D or invest in people, also labour laws are pathetic in India, govt doesnt care about employees, 90 days notice period, bond for freshers, we still are in 1980s.”

"We need a culture reset. We need to start at the base layer of Education that’s where the root of all problem lies. We’re taught to just solve and not think. To create a research oriented culture, we need to invest in our kids’ education and inculcate in them a R&D mindset," another user wrote.

Earlier too, while speaking to news agency PTI, Vembu had said that the country requires a corporate mandate on Research & Development similar to CSR to promote a technology innovation culture which will help build critical technologies.

The Padma Shree awardee and CEO of the country's first billion-dollar IT product company said the country lacks a culture of its own R&D and pointed out that merely having manufacturing facilities of global tech product companies like Apple will not bring "high income jobs" for people at large in India.

"A corporate mandate to spend one or two per cent on R&D is needed for India like the two per cent CSR (corporate social responsibility) mandate. It is a high potential investment," Vembu stated in a brief interview with PTI.

He added that the government has expanded the scope of CSR to R&D but the country currently does not have any dedicated research mandate for corporates.

When asked about India's success in receiving Apple's investment to manufacture in India, Vembu compared the situation with Mexico where there are factories for US companies but they don't have much value addition.

"We (India) have to know what is a long-term model for us," he asked.

"We need those factories but we also need the R&D, to 'own the technologies' because we need to have high income jobs to come here (India). Then the income will spread through the economy. Mere factories without intellectual properties will have limited benefit on the economy," Vembu said.

Union IT minister Ashwini Vaishnaw had earlier announced Apple's iPhone is now getting made in India and its biggest plant is being set up at Hosur near Bengaluru. Some 60,000 people will work in a single factory.

Emphasizing building a culture of research, Vembu said, "There are large multiplier effects from R&D jobs. We need these jobs here." India must focus on design, development, and manufacturing for the world, Vembu told the news agency.

(With inputs from PTI)