Zoho CEO Sridhar Vembu Calls For Corporate Mandate On R&D In India

In order to build a technology innovation culture in India, the country needs a corporate mandate on Research & Development similar to CSR, Sridhar Vembu, founder, Zoho Corporation said.

“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 said as quoted by news agency PTI.

According to Vembu, the country lacks a culture of its own R&D, adding that merely having manufacturing facilities of global tech product companies such as Apple is not enough to create ‘high income jobs’ for people at large in India.

It must be noted that iPhone manufacturer Apple is ramping up its presence in India, the biggest unit to manufacture Apple iPhone in India will be set up in Hosur near Bengaluru, telecom and IT Minister Ashwini Vaishnaw said recently.

Against India getting Apple’s new manufacturing units, Vembu drew parallels with the Mexico situation. The country is home to factories for US companies but they don’t have much value addition. For example, Mexico’s R&D intensity is one of the lowest in the Organization for Economic Cooperation and Development (OECD) area while its gross domestic expenditure on R&D is as low as 0.5% of GDP, according to an OECD report.

Hence, Vembu emphasised on having a long-term model for the country.

“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 added.

As stated by him, there are large multiplier effects from R&D jobs. He also opined that India should focus on design, development, and manufacturing for the world.

It is not the first time Vembu was seen calling for R&D for India, as well as his startup Zoho. Earlier, he said that investments in R&D have held the company in good stead when it comes to customer acquisition.

“Our profits will continue because we spend three times as much on R&D as what we do for marketing. This helps us keep our costs low and maintain profits even as we have seen some slowdown in 2022,” Vembu said on the sidelines of a Zoho presentation in Delhi last month.

Zoho saw its annual revenue surge beyond the $1 Bn mark in calendar year 2021 (CY21). Back then, Vembu said that Zoho’s diversified and money-saver product portfolio helped Zoho cross the $1 Bn revenue mark.