Gates urges India to move from low-cost to R&D

Billionaire Bill Gates on Friday urged India to move away from low-cost labor toward high-end research and development to keep its giant IT sector competitive.

On a visit to New Delhi, the co-founder of Microsoft Corp called on the Indian government to speed up its commitment to R&D and to boost low number of home-grown PhD students.

Gates told a panel discussion that India's "IT success story" should strive to add value and move away from low-cost labor as other developing countries play catch-up.

"At first some of that (IT boom) was built on low-cost labor. And, of course, as time goes on, you don't want to have that as the only differentiator and it's not a sustainable thing, because others can come along with that as well," Gates said.

India's R&D sector has made strides in recent years and attracted some big foreign hitters, including Microsoft, in keeping with its IT- and service-driven economic boom.

But hampered by structural problems and a lack of government commitment, India's R&D still lags behind the United States and Asian rival China. China has more than 1,100 R&D centers compared to less than 800 in India.

"Leading companies here are contributing a lot of ideas and techniques. Even more of that has to happen and bring it to its full potential," Gates said.

"You've got to get the government, universities … and companies like Microsoft to deepen their commitment to R&D."

India produces 100 computer science PhDs a year — a fraction of China or the U.S. — even as it exports a large number of students abroad. While English-speaking India is cheaper than China for R&D, New Delhi gives few incentives to researchers.

Beijing offers incentives like tax breaks for R&D centers, and special economic zones provide infrastructure for hi-tech and R&D industries.