Strategic Approach to Strengthening the International Competitiveness in Knowledge Based Industries: The Indian Pharmaceutical Industry

AbstractThis paper identifies the factors that determine the export competitiveness of firms in the Indian pharmaceutical industry. The analysis is based on the primary survey data as well as the PROWESS database. Our findings suggest that the competitiveness of firms depends not only on firm specific advantages but also on government fiscal incentives. Among the firm specific factors own R&D efforts emerged as one of the prime factors influencing export competitiveness. Technology imports on the other hand did not play a significant export-enhancing role. Brand promotion and lower costs were other important determinants of the export competitiveness. The study also finds that the determinants of export-competitiveness differ across firms of different size and ownership. High transaction and production costs are found to be major constraints faced by Indian exporters. Based on the quantitative and qualitative analysis, the study draws useful policy implications to strengthen the export competitiveness of the industry.