Intellectual Property Rights policy and India's competitiveness

India's current Intellectual Property Rights (IPR) regime is at the cusp of a major change. The past year has been quite momentous for India’s IPR regime. It is because one is witnessing a shift in India's policy priorities with respect to broad measures that have been undertaken by the newly-elected government in the sphere of Intellectual Property. It is critical from an investment viewpoint. IP forms the basis of protection for both domestic as well as foreign companies in a developing economy.

A new IPR policy is already on the anvil and a six-member expert panel - IPR Think Tank - has been recently constituted to draft the National Intellectual Property Rights Policy of India and to advise the Department of Industrial Policy and Promotion (DIPP) on IPR issues.

The broad contours of the new policy, in our view, will be in line with the National IP Strategy that has already been formulated by the government. On November 13, the IPR Think Tank called for suggestions from people on the new IP policy. It is a welcome step to getting people engaged in policymaking. A change in India’s approach to its current IPR regime was brought about not only because of India’s internal factors but also from external quarters, most particularly from the developed world and most specifically, the US.

During his five-day visit to the US, Prime Minister Narendra Modi discussed several issues and importance was given to trade between the two countries. Mention during the visit was also made of a special report of the US Trade Representative (USTR) that talks about India's problems with respect to intellectual property regime. A joint statement (on September 30th) mentioned the need to “establish an annual high-level Intellectual Property Working Group with appropriate decision-making and technical-level meetings as part of the Trade Policy Forum”.

It must be noted that the US initiated an “out-of-cycle” review of India based on the recommendations of the special report. The report placed India in the ‘Priority Watch List’ in 2014. The stated purpose of the review was to further encourage progress on IPR issues within India. The Indian commerce minister termed the review a unilateral action and asserted that India’s IPR regime was fully TRIPS compliant. The January report of the Global Intellectual Property Centre (GIPC) of the US Chamber of Commerce had also indicted India when it was placed at a dismal last rank out of the 25 countries considered for the study.

The pertinent question thus arises is who will get impacted by the bringing in of the new IP policy? In our opinion, the policy would broadly have an impact on the FDI inflows in a developing country, which helps India not just in terms of capital inflows, but also in terms of technology and expertise. With respect to sectors, the coming in of the policy would have wide-ranging implications, in our opinion, on sectors like the pharmaceutical, solar and IT that are considered to be IP intensive. It is also because sectors like pharmaceuticals had traditionally had companies that were in the ‘generic’ space. There are historical reasons for the same particularly the Patent Act of 1970 that granted process patents instead of product patents. This allowed process reengineering. India became TRIPS compliant in 1994 and has amended its IP regime considerably since then.

Another point to ponder over is how much will bringing in a new IP policy impact other initiatives of the government like the recently launched ‘Make in India’ campaign? In our opinion, here too positive synergies will be seen between a new IP Policy and boosting the confidence of companies and investors wanting to invest in India with an improved IP protection.

Considering the changes that are underway, India is indeed at a critical juncture where a major IP revolution of sorts may change the dynamics of IP protection and enforcement. Will this lead to greater innovation? Comparisons show that countries with better IP Protection and laws tend to be positively correlated with better scores on global innovation indices. Thus, it is imperative at this juncture that we, as a people, give ourselves a policy that not only looks at improving India’s present innovation ecosystem, but also focuses on India’s future competitiveness.

By Amit Kapoor, co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness & Editor of Thinkers. The views expressed are personal.