As global businesses navigate a rapidly evolving geopolitical and economic landscape, India has emerged as a critical hub for Engineering Research and Development (ER&D). A joint report by Deloitte and NASSCOM, titled “Spotlight on Germany’s evolving ER&D operating model strategy: Tapping into India advantage,” highlights India’s growing role in shaping the future of global ER&D. With a growing GCC workforce focused on ER&D services, India is transitioning from traditional support functions to becoming key drivers of digital transformation and innovation across industries worldwide.
As Europe emerges as a key contributor to global R&D spend—accounting for 24 percent in FY23—Germany leads the charge with 36 percent of the region’s R&D investments. The report reveals how German companies, particularly in sectors such as automobiles and industrial engineering, are increasingly turning to India’s mature ER&D ecosystem to boost product innovation, resilience and speed to market. The collaboration between Germany’s engineering expertise and India’s digitally skilled workforce underscores a growing interdependence aimed at addressing global challenges and driving innovation.
India continues to build a strong ecosystem to further strengthen its position as a global leader in ER&D. The country commands a significant share of the GCC market and hosts over 1,700 operational GCCs, of which more than 1,680 house ER&D services. A sizeable percent of the global top 50 engineering service providersis headquartered in India. Home to 91 active unicorns and a burgeoning tech start-up community of 31,000+, India is also advancing cutting
edge technologies such as GenAI, spatial computing and industrial metaverse. Initiatives such as MeghrajAI and IndiaAI, combined with academic partnerships with institutions such as IIT Bombay and IISc Bangalore, further strengthen India’s stature as a global innovation hub and a strategic partner for businesses shaping the future of ER&D.
Keerthi Kumar, Partner, Deloitte India, said, “India’s Engineering R&D segment has come a long way bolstered through a robust ecosystem comprising the world’s largest GCC base, leading Engineering Service Providers (ESPs), third-largest and burgeoning start-up community and globally renowned academic institutions. These forces have consistently been moving the needle for the ecosystem from being a doer and collaborator to becoming a creator and owner, primarily around market-shaping dimensions such as digital engineering, autonomous and connected systems and more importantly, sustainability. This is naturally reflected in the 8 percent CAGR over the past four years for India’s ER&D segment, the fastest-growing and the second-largest segment in the Indian tech industry and more noticeably, the 55.4 percent growth contribution for the net tech exports the country witnessed between 2023 and 2024.”
India’s abundant talent pool, skilled in traditional and emerging technologies, combined with favourable government policies and a robust ecosystem of academia and start-ups, has made the country a preferred destination for MNCs
and their GCCs. This conducive environment enables organisations to scale rapidly, diversify operations and enhance risk mitigation and business continuity efforts.
Siva Polimetla, Head – Engineering R&D, NASSCOM,said, “India’s rapid emergence as a global ER&D leader is being driven by its unmatched talent pool and its ability to spearhead cutting-edge innovations. The growing synergy between GCCs, ESPs and start-ups in India is fuelling growth in high-impact sectors such as AI, the metaverse and spatial computing. These areas are not only shaping the future of product development but are also strengthening India’s position as the go-to destination for digital engineering and innovation—an invaluable partner for global companies, particularly those in Europe, looking to stay ahead of the curve in today’s technology-driven world.”
With advancements in AI, digital engineering and sustainability, India’s GCCs are shaping the future of global ER&D, using the country’s robust infrastructure, talent pool and innovative ecosystem to maintain its competitiveness on the global stage.
