India will likely contribute 22 per cent to the global engineering research and development (ER&D) sourcing market by FY30, a report showed on Thursday.
The country’s share in the global business ER&D sourcing is projected to increase from $44-45 billion in 2023 to $130-170 billion by FY30.
Software, automotive and semiconductor sectors are expected to contribute more than 60 per cent of India’s share of ER&D sourcing by FY30, according to the report by Nasscom in partnership with BCG.
Semiconductor ER&D sourcing share is expected to see the highest jump from 9 per cent share in FY23 to 12 per cent share, to become the third highest contributing sector by FY30.
“India’s position in the global ER&D sourcing arena is truly unique, driven by our remarkable combination of ER&D innovation expertise, and ability to provide scalable talent,” said KS Viswanathan, Vice President (Industry Initiative) at Nasscom.
Globally, business ER&D spending has experienced a 7-8 per cent CAGR from 2020 to 2023, and is expected to grow at an 8-9 per cent CAGR from 2023 to 2030.
The market size is expected to grow to a size of $1.8 trillion, fuelled by renewed interest in the segment, demand for digital products and services, and the adoption of new technologies, said the report.
“Prominence of digital in engineering will also continue to increase, and will likely contribute 48 per cent of all ER&D spend by 2030, and will increasing drive convergence of software and traditional engineering stack,” said Amit Kumar, Managing Director and Partner, BCG.
The automotive, software, healthcare, and medical devices sectors are expected to be the top three contributors to the growth of ER&D spending by 2030.
The semiconductor industry is also expected to play a significant role, driven by increasing demand and investment.
It is anticipated that digital engineering will be the primary driving force behind the accelerating ER&D spending, accounting for approximately 65 per cent in 2030, up from 45 per cent in 2023.
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