3M sees Indian R&D potential

18 October 2011

NEW DELHI: 3M, the major US conglomerate, believes enhancing its innovation capabilities in India will yield a distinctive form of "value creation".

The company, which owns Scotch Brite, Post-It and Nexcare, has invested Rs100 crore ($20.3m) in a new Indian research and development hub, charged with formulating and tailoring products to meet domestic needs that may also have transferable potential.

"India offers unique value creation," Jay Ihlenfeld, vice president, Asia Pacific, for 3M, told Forbes. "Other cultures are driven more by brand and packaging, India is about basic value."

3M has similarly outlined an ambition to accrue 40% of revenues from products "made in India for India" by 2016, versus the figure of roughly 30% today.

This forms part of a broader objective of fuelling increased sales in the rapidly-growing Asian economy, currently standing at $245m, but expected to hit $1bn by 2016.

3M sells around 7,000 products at present in India, where it has been active for 23 years. Core areas of focus going forward include categories from software to predictive engineering and polymer processing

Alongside helping the company tap a key future market, ramping up its Indian innovation strengthes provides advantages in terms of accessing highly-qualified personnel and a relatively low cost base.

"We invest 2.5% of our net sales in our R&D as against 5% by the parent firm worldwide," said Ajay Nanavati, managing director of 3M India.

Zinnov Management Consulting stated in a recent study that the operating expenses covering Indian R&D centres are 25% lower than those in China, saving multinationals some $44bn over the last three years.

Chandramouli CS, director of Zinnov Management Consulting said the costs of doing R&D in Tier 1 Indian cities had risen, while secondary Indian locations could offer increasingly sophisticated infrastructure for up to 50% cheaper. 

 Jeff Immelt, CEO of General Electric, has also proved effusive about India's prospects, saying: "More medical industry innovations will occur in India than any other part of the world.

"In India, consumers are more directly involved in their health care because they lack health insurance, forcing the country to come up with low cost, highly innovative ways to address healthcare."

Data sourced from Forbes/Economic Times/Industry Week; additional content by Warc staff