Top reasons for rejection of DSIR Recognition

In brief The Department of Scientific & Industrial Research (DSIR) is operating a scheme for granting recognition & registration to in-house R&D units established by corporate industry.

The in-house R&D units applying for recognition to DSIR are expected to be engaged in innovative research & development activities related to the line of business of the firm, such as, development of new technologies, design & engineering, process/product/design improvements, developing new methods of analysis & testing; research for increased efficiency in use of resources, such as, capital equipment, materials & energy; pollution control, effluent treatment & recycling of waste products or any other areas of research.

Market research, work & methods study, operations & management research, testing & analysis of routine nature for operation, process control, quality control and maintenance of day to day production, maintenance of plant are not considered as R&D activities.
The Department of Scientific and Industrial Research (DSIR) has recently started to release the list of companies who get recognized by DSIR, closed by DSIR and who withdrawn their application.
Over all, only about approx. 2000 companies are recognised by DSIR in India at this time, which is miniscule considering there are about 7000 companies listed in Bombay Stock Exchange (BSE) and there are about 1.5 million SMEs in India.

This directly points to the lack of awareness of this scheme and how companies that believe they don’t do R&D or have a proper set up can benefit by this scheme.
From the recent list we can see that four out of five companies who applied for recognition get rejected due to lack awareness of R&D activities, set up etc.

Eligibility criteria
The basic criteria for DSIR recognition are given below:
 Company should be three years old
 Company should be listed under Pvt Ltd, Public Ltd.
 Company has minimum 1000 sq ft R&D area.
 Company should be involved in new product development, new process development
and improvement of existing process.

Reason for Rejection
The reason for getting rejection from DSIR are many like lack of awareness about R&D
activities, how to show the R&D layout etc. Some of major reason of the same are given below:

  1. Company may not have a dedicated R&D Area or set up but it is engrained in the business
    without giving special emphasis to Research & Development.
  2. Company may not have clarity on R&D activities which can be allow by DSIR under this
    scheme.
  3. Company may not identify the R&D expenses for last three years and not showing in
    application properly.
  4. Company may not identify the major ongoing and future projects.
  5. Company may not have clarity on future plans for R&D activities and not able to explain to
    DSIR scientist.
  6. Company may not have dedicated manpower, area and account for R&D.
  7. Company may not shoot proper walk-in video for R&D facility.
  8. Company may not show the proper finance figure in the application.
  9. Lack of confidence at the time of interview, and not able to explain what kind of R&D they are
    doing in front of DSIR scientist.

Checkpoints of DSIR process:
 Identification of R&D layout and extract the dedicated lab for R&D from existing layout
 Identification of R&D equipments, manpower
 Identification of R&D expenses for last three years
 Identification of R&D achievements for last three years
 Finalization of R&D expenditure
 Internal audit of R&D expenses, if any

The guidelines can be accessed from the following link:
http://www.dsir.gov.in/#files/12plan/bird-crf/rdi_guidelines_201511.html

Let’s talk
For a deeper discussion of how this issue might affect your business, please contact:
letstalk@scinnovation.in
Head Office
109, Marine Chambers, 1st Floor, 43,
New Marine Lines, Mumbai-400020. (INDIA)
Phone: +91 9962696204 
Email: letstalk@scinnovation.in

Increasing R&D investment in India: Need of the hour

Abstract:

India needs to become technically self reliant in key areas such as natural resources, agriculture and defense whereby its R&D investment has been lacking as also the only incentive available for the private sector through DSIR certification leading to income tax benefits u/s 35 (2AB) of Income Tax Act is being withdrawn from 1st April 2020 which STIAC under PM office has recommended to continue along with other steps to improve R&D investment scenario in India including public research institutions.

***

Although we all are aware that R&D investment is a critical area for India to create appropriate technologies for its social problems it has been an underinvested area both by the Government as also the private sector.

In today’s age of disruption and hyper innovation it is extremely relevant for organizations to be future ready which requires an open mindset towards innovation and R&D investment is a critical barometer of the same.

To address this issue, Science Technology and Innovation Advisory Council (STIAC) under Prime Minister of India has recommended that companies in key sectors set aside funds for Research & Development (R&D) to the tune of 2% for developing and implementing technologies related to priority areas.

Another important recommendation made by STIAC headed by Vijay Raghavan is against the move of the Govt. of India to withdraw providing tax benefits to companies recognized by Dept. of Scientific & Industrial Research (DSIR) under section 35 (2AB) of the Income Tax Act as part of sunset clause applicable from 1st April 2020.

This is an important consideration since this is the only incentive available to the private sector for making investment in R&D and globally countries such as USA, Singapore and Australia are progressive with benefits to the tune of 400% of the R&D investment made. In fact Europe which was under severe recession over the last few years increased the investment in innovation so that it could disrupt the market with cutting edge technologies as also solve important issues related to environment, natural resources and so on.

Another important area being touched upon is having a faster grant process for various Govt. departments and organizations such as BIRAC, GITA, TDB etc. to ensure that the innovation funding is made available in time which is very critical for researchers to achieve market success.

Recommendation:

Although the recommendations is a step in the right direction; it is imperative that it is followed up with and implemented at the earliest to ensure that the private sector and specially start ups have both the incentive and the financial support to invest in R&D in India.

The R&D investment ecosystem is lacking in India and requires the right policies and investment by Govt. in priority areas to solve societal problems as also take advantage of the disruption which is now gripping various industry sectors and moving at a much faster rate than ever before where India has a huge advantage both due to the young talent pool and a large captive market.

*** Keywords:

R&D investment, DSIR, Section 35 (2AB), R&D investment, STIAC

About the Author:

Rajeev Surana is a seasoned professional in the area of innovation ecosystem with 10+ years experience as innovation professional having worked with startups, large companies and MNCs in the area of intellectual property, R&D investment, technology commercialization.

Rajeev is a qualified Patent Attorney with a love for running which takes him to different parts of the world.

He is also author of the layman’s guide ‘Protect Your Ideas’ published in 2012 as also contributor to various publications such as Entrepreneur magazine, Your Story etc.

Rajeev is founder at Scinnovation Consultants Pvt. Ltd. as also an exciting organic footwear company, Colour Me Mad and based out of Mumbai, India.