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Is FDI a Four-Letter Word for India?

Is FDI a Four-Letter Word for India?

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By Jasper MacSlarrow

India’s Department of Industrial Policy and Promotion (DIPP) recently released numbers purporting strong international investment in the country’s pharmaceutical sector. The data, which provides a snapshot of the foreign direct investment (FDI) India attracted between April and June of this year, is layered thick with innuendo that recent patent revocations and denials during the same time period have had little effect on India’s investment climate.

When India is only comparing itself to… well, itself… perhaps that may be the takeaway. But with a promising economy and massive workforce, India is in fact significantly lagging in attracting FDI, as compared to its BRIC (Brazil, Russia, China) counterparts and evidenced in the GIPC’s recent India: The International Outlier on IP report:

india graph

Unfortunately, resource-intensive multinational companies, like the biopharmaceutical sector, aren’t necessarily flocking to India, despite its moniker “pharmacy of the world.” Following judicial and administrative rulings denying internationally recognized patents to innovative companies like Bayer, Novartis, Roche, and Pfizer just to name a few, the business community has growing concerns about the investment climate in India, especially amidst lackluster, insufficient, and precarious intellectual property (IP) rights and laws.

According to the Organization for Economic Cooperation and Development (OECD), the strengthening of a national IP environment is associated with significant increases in FDI inflows. Using this model, the GIPC India report found that the country needs to strengthen its IP regime by no less than 14% (you can read the report to find what exactly we mean by strengthen) vis-à-vis the GIPC International IP Index in order to rank among other BRICs.

So, does India have promise to become a global powerhouse of innovation and major contributor to the biopharma world? Absolutely. Will India ever have the opportunity to attract foreign investment consistent with the size of its economy? Unequivocally yes. In fact, it has the opportunity today should the government and courts decide to reverse their course and stop the seemingly continuous repudiation of IP rights for both domestic and foreign firms.