A group of 130 domestic firms that expanded research spending by over 20% annually generated superior shareholder returns compared to the NSE 500 TRI. However, this commitment is concentrated among very few players, with only 28 out of more than 2,000 listed companies dedicating more than 5% of sales to research. In fact, average listed corporate research spending as a proportion of sales dropped from 0.64% in FY16 to 0.56% in FY26. To meet ambitious 2047 economic milestones, national expenditure must rise from current levels toward 2% of gross domestic product.
Corporate research and development spending in India is failing to keep pace with overall…: Corporate research and development spending in India is failing to keep pace with overall revenue growth across listed entities.
Increasing national research expenditure toward 2% of GDP is deemed essential for India t…: Increasing national research expenditure toward 2% of GDP is deemed essential for India to reach developed economy status by 2047.
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The analysis covered 130 companies that recorded a compound annual growth rate (CAGR) of more than 20% in R&D expenditure between FY21 and FY26. Their average stock price CAGR of these companies stood at 23.5% between April 2021 and September 2026, outperforming the benchmark by nearly 10 percentage points.
The outperformance was more pronounced among companies that combined higher growth in research spending with greater R&D intensity. The 27 companies that grew their R&D expenditure by more than 20% and allocated over 2% of sales to research and development on a three-year basis delivered an average stock price CAGR of 32.5% during the period.
This was more than double the 13.7% return generated by the NSE 500 TRI.
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Only 28 listed companies spend over 5% of sales on R&D
Despite the outperformance of companies with higher research spending, R&D investment remains limited across India's listed corporate sector.
Only 28 of more than 2,000 listed companies spend over 5% of their sales on research and development, while 59 companies…
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