The combined effects of globalisation, economic liberalisation, and rapid diffusion of information along with changes in the intellectual property regime are substantial. This paper analyses the Indian experience of globalisation of R&D. The first R&D centres founded in India by global players acted as a strong signal for investment by further global firms. This in turn led to clustering, and to the setting up of a number of entrepreneurial firms in the same cluster locations. The end results have been enhanced investor confidence and the stimulation of entrepreneurial clusters. Globalisation of R&D has had a positive influence in all these developments, as shown by seven illustrative examples. On the negative side, globalisation of R&D is increasing the technological distance between developed and developing countries. Commercialisation of R&D is increasing, and R&D in traditional technologies is becoming marginalised. Public policy for stimulating innovation in developing countries needs a reorientation to meet the challenges of globalisation.
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