Zoho CEO Sridhar Vembu calls for increased R&D in India

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Sridhar Vembu, the founder of Zoho Corporation, has called for a corporate mandate on Research & Development (R&D) in India, similar to the country’s corporate social responsibility (CSR) mandate. In an interview with news agency PTI, Vembu said: “A corporate mandate to spend one or two per cent on R&D is needed for India like the two per cent CSR mandate. It is a high potential investment.” Vembu believes that India lacks a culture of its own R&D and that simply having manufacturing facilities for global tech companies like Apple will not create enough “high income jobs” for the country’s population.

Vembu drew comparisons between India’s situation and that of Mexico, which has factories for US companies but lacks value addition. According to an OECD report, Mexico’s R&D intensity is one of the lowest in the Organization for Economic Cooperation and Development (OECD) area, while its gross domestic expenditure on R&D is as low as 0.5% of GDP. Vembu argued that India needs both factories and R&D in order to “own the technologies” and create high income jobs, saying: “Then the income will spread through the economy. Mere factories without intellectual properties will have limited benefit on the economy.”

Vembu has previously spoken out about the importance of R&D for both India and his own company, Zoho. He said that investments in R&D have helped the company with customer acquisition and that “our profits will continue because we spend three times as much on R&D as what we do for marketing.” Zoho’s annual revenue exceeded the $1 billion mark in calendar year 2021 (CY21), with Vembu crediting the company’s diversified and cost-saving product portfolio for this achievement.