It is an age of Innovation. Global firms are spending a huge chunk on innovation-driven product development. Engineering and R&D (ER&D) centers drive innovation, helping businesses remain competitive in rapidly evolving markets.
Defining Captive Engineering and R&D Centers
Captive engineering R&D centers (ERDC) in India are 100% subsidiaries (fully owned) of multinational companies (MNCs) that focus on research and development, product development, and engineering services.
In essence, they are the Global Capability Centers focusing on Engineering or R&D activities or both.
These centers operate as in-house units (an in-sourcing model) rather than third-party service providers, allowing companies to maintain full control over innovation, resulting in intellectual property (IP), and strategic initiatives. Apart from control they also help in flexibility of decision making, keeping cost low but quality high up to expectation.
Engineering Centers – Solutions for Practical Implementation
Engineering centers focus on applying knowledge to solve industry-specific challenges. Their primary objectives include:
Product Design and Development
Engineering centers design products that blend functionality with market needs. For example, consumer electronics companies develop ergonomic, energy-efficient smartphones while adhering to global quality standards.
The rise of digital in engineering allows businesses to simulate real-world operations, enhancing efficiency in product development.
Process Optimization
By refining manufacturing techniques, engineering centers reduce operational costs and improve efficiency. Industries such as automotive and aerospace rely on process engineering to ensure minimal waste and maximum output.
Testing and Quality Assurance
Products undergo rigorous testing to ensure durability, safety, and compliance with international standards. For example, engineering teams in India help test advanced vehicle systems for global automakers.
Project Management
Effective project management ensures that engineering solutions are delivered on time and within budget, leveraging cross-functional expertise.
R&D Center – Catalysts for Future Innovation
R&D centers emphasise exploration and ideation to create new technologies and scientific breakthroughs. Their scope includes:
Scientific Research and Discovery
R&D teams expand the frontiers of knowledge, exploring fields such as AI, bioengineering, and renewable energy. For instance, R&D efforts in India have contributed to breakthroughs in low-cost solar panels.
Prototyping and Proof-of-Concept
Engineers transform innovative concepts into tangible prototypes, validating their feasibility. In sectors like electric vehicles (EVs), this step ensures faster adoption of sustainable mobility solutions.
Intellectual Property Creation
Protecting innovations through patents is a cornerstone of R&D. India’s robust IP laws enable businesses to safeguard their proprietary technologies.
Technology Advancement
By focusing on long-term innovation, R&D centers drive technologies such as quantum computing, which are reshaping industries.
India’s growing Landscape
The R&D in 21st century has become central to competitiveness and so also, the cost and efficiency of innovation. Given this, India, with its diverse, high-quality technology talent pool available at an affordable cost, has become a focal point for R&D and engineering services.
Historically, Texas Instruments (TI) set up a global research and development (R&D) center as early as 1985, followed by Motorola in 1991. India, thus, had taken an early edge. Ever since 1985, the recognition of India as a destination for R&D and Engineering Services has been growing.
However, the last decade has seen an increased drive. Global Capability Centers (GCCs) have scaled up the value chain to include R&D centers in their scope. This has now been followed by a renewed movement toward ‘Captive and Dedicated’ Engineering and R&D Centers as a strategic approach.
As industries worldwide pursue breakthrough innovations for cutting-edge technologies, product design and solutions, India stands out with its unparalleled combination of skilled talent, cost-efficiency, and robust government support.
“Top global organizations trust India as their strategic partner for innovation and growth. India has become a significant hub for research and development (R&D) not only in Information Technology and FinTech but also in other industries attracting various multinational companies.”
Why India for ER&D?
Cost versus strategic evolution
Initial Role: GCCs, along with ER&D Centers, were originally set up in India as cost-saving measures.
Strategic Role in Innovation: Over time, India as an ER&D center destination evolved to take on strategic roles with active players in product engineering, research, and development of next-generation technologies.
Changing Perceptions: Multinational companies now view India as a hub for high-value R&D and innovation. This shift is fueled by India’s growing infrastructure, skilled workforce, and increasing technological expertise.
Skilled Workforce
Large Talent Pool: India produces more than 1.5 million STEM (Science, Technology, Engineering, and Mathematics) graduates annually. This vast pool of highly qualified engineers, scientists, and technical experts makes India an ideal location for setting up GCCs focused on R&D.
Emerging Tech Skills: Apart from core engineering disciplines, India is seeing rapid growth in skills related to emerging technologies like artificial intelligence (AI), machine learning (ML), blockchain, and data science. GCCs in India can tap into this talent pool to build cutting-edge products and solutions.
Quality Education System: With top-tier engineering colleges and universities, India consistently produces graduates with the skills and knowledge needed for advanced research and engineering roles. This makes it easier for GCCs to recruit top-tier talent.
Cost-Effectiveness
Lower Operational Costs: Operational costs in India are typically 30-40% lower than in Western countries. The affordable labour costs, along with low overheads for office space, utilities, and other operational expenditures, make India an attractive destination for global companies.
Better Resource Allocation: With cost savings from setting up operations in India, companies can allocate resources to other critical areas such as marketing, R&D, product development, and innovation, further strengthening their global competitiveness.
Collaborative Ecosystem
Proximity to Innovation Hubs: India’s cities like Bangalore, Pune, and Hyderabad host vibrant startup ecosystems, world-class universities, and research institutions. This collaborative environment fosters innovation, allowing GCCs to engage in cutting-edge research and development, enhancing their product offerings.
Cross-Industry Collaboration: The presence of numerous startups in diverse sectors—ranging from artificial intelligence to clean energy—offers GCCs opportunities to collaborate on projects across industries, granting access to new technologies and solutions.
Government Support
Incentives for R&D Investment: The Indian government actively encourages foreign investment in R&D through initiatives like “Make in India,” which promotes manufacturing and innovation within the country. These initiatives offer various tax incentives, grants, and other benefits to companies setting up R&D facilities in India.
IP Protection and Infrastructure Support: India has strengthened its intellectual property (IP) laws, ensuring better protection for innovations developed by GCCs. Additionally, government-backed initiatives have led to improved infrastructure, making it easier for companies to establish R&D centers with the latest technologies.
Key Industrial Clusters ER&D Center Clusters in India
Following are major clusters of Engineering and R&D centers in India
Bengaluru (Bangalore) – IT, Electronics and Aerospace
As stated above Bangalore housing 400+ ER&D Centers became an important hub of Captive R&D center activity and retains that spot till today in 2025.
Known as India’s Silicon Valley, Bangalore houses R&D centers for IT giants like Google and aerospace leaders like Airbus. The city is a hub for AI, software development, and Aerospace and satellite technology.
Some notable ER&D Centers in Bengaluru are MNCs namely – CISCO, Texas Instrument, Motorola, Bosch, Mercedes-Benz, General Electric (GE), Google, IBM, Microsoft, Volvo, Adobe, Schneider Electric SE, Boeing
Pune – Automotive and Manufacturing
Pune has emerged as the second largest ER&D Center cluster for MNCs in India across multiple Industrial domains.
Pune excels in automotive and other heavy and advanced manufacturing R&D. Tata Motors’ center here has pioneered EV designs for global markets.
Pune district housing 200+ ER&D Centers has some notable names listing MNC namely – Emerson, Eaton, Cummins, Vascon, Seqens, Marquardt, Siemens, Rolls Royce, Toro, John Deere, Honeywell, NVIDIA, Volkswagen, Knorr-Bremse, Carraro etc.
Chennai – Automotive and Renewable Energy
A leader in automotive engineering, Chennai is also advancing sustainable energy solutions. The city is home to Ford’s EV innovation hub and solar power companies like Vikram Solar.
Chennai is housing ER&D centers for Renault, Hitachi, Comcast, Saint-Gobain, AstraZeneca, Valeo etc.
Hyderabad—Pharma and Biotechnology
With companies like Dr. Reddy’s Laboratories, Hyderabad drives breakthroughs in drug development, including vaccines and biologics.
Hyundai, Hexagon, DuPont Knowledge Center, Mylan, Ferring Pharma, Allegro Microsystems etc., have ER&D centers in Hyderabad as a location.
Ahmedabad – Chemical, pharmaceuticals and Textiles
This growing hub is making strides in cost-effective drug manufacturing and sustainable textile engineering.
Noida and Gurgaon—IT and Electronics
Proximity to the National Capital Region (NCR) makes these cities ideal for IT and electronic R&D, with Samsung and HCL leading the charge.
Some Tire III cities also have an ER&D Center presence in India. Notable amongst them are Ahmedabad for Chemicals and Pharma.
What NASSCOM Says
According to a NASSCOM BCG report, “the global business in Engineering, Research & Development (ER&D) industry is expected to go from $1.5-1.8T in 2023 to $2.5-3.3T in 2030, growing at a CAGR of 8-9%. India remains a major destination for ER&D outsourcing with $44-45B spent in 2023, and in the future, it is expected to retain its strong position with an expected spend of $130-170B in 2030.”
The resurgence of AI, and digital imperative across sectors will drive industry at ~9% CAGR in ER&D spend till 2027. Beyond 2027, growth is expected to accelerate marginally (~10% CAGR), driven by increasing digital spend and sophistication of digital needs.
As digital engineering drives accelerated spend, few sectors will see a disproportionate rise in the share of digital engineering spend – Automotive, Industrials, Energy, Utilities and Oil & Gas.
India is going to remain a leader in Engineering and R&D centers in the next decade or so.
Industries Leading Engineering and R&D in India
India’s engineering and R&D efforts span multiple sectors, driving global innovation and competitiveness.
- IT and Software Development
- Automotive & EV
- Electronics and allied developments
- Chemical and Specialty Chemicals
- Pharmaceuticals and Biotechnology
- Aerospace and Defense
- Renewable Energy
- Specialty Textiles
- Advanced Manufacturing
Conclusion: The Future of ER&D Centers in India
India is one of the fastest-growing economies in the world with a stable political environment and hardworking and committed people. The government of India is focusing on innovation and Industrial R&D as a theme and is open to collaboration rest of the world. India is bound to rise as an engineering and R&D hub, driven by its talent pool, cost efficiency, and innovation-friendly policies. Businesses investing in India gain access to a thriving ecosystem that fosters technological breakthroughs and global competitiveness.
Partner with us to unlock the potential of India’s engineering and R&D capabilities and create solutions that shape the future.
