Do stay innovative, Prabhuji

This article was originally published in the Economic Times on October 24, 2017.

This week will signal a milestone in setting the course for US-India trade relations. Tomorrow, US Trade Representative Robert Lighthizer will meet his Indian counterpart, commerce and industry minister Suresh Prabhu, in Washington for the 11th round of the US-India Trade Policy Forum (TPF). The TPF marks the first high-level bilateral dialogue between the Trump administration and Prime Minister Narendra Modi’s reshuffled Cabinet.

Established as a platform to resolve market access issues, the TPF is also ameans for bilateral exchange of best practices on trade facilitation. Since its inception in 2005, bilateral trade grew from $36 billion to more than $100 billion today. However, both the US and India have been slow to make strides toward their goal of $500 billion in bilateral trade by 2022.

This month’s TPF is different for two reasons. One, it will take place against a backdrop of an outcomesdriven US administration whose policy priorities are predicated on the size of its trade deficits — even with long-time strategic partners.

Two, at a time when the US is investigating China over intellectual property theft, the TPF will revisit one of the biggest pain points of the US-Indiatrade relationship: intellectual property rights (IPR). While India poses awide range of commercial barriers for US companies operating in the country, the absence of a strong IPR framework in particular overturns any semblance of a level playing field for innovative industries. What’s more, it thwarts India’s own potential to foster domestic innovation and attract foreign investment.

Even with challenges looming, the timing of the 2017 TPF seems opportune given the recent installation of Suresh Prabhu as India’s new commerce minister. A Cabinet-ranking minister even during the tenure of the business-friendly Prime Minister Atal Bihari Vajpayee, Prabhu has been a stalwart supporter of pro-innovation policies and business solutions to address social issues.

In his most recent role as railway minister, he presided over the world’s biggest railway station redevelopment project with a simple mantra: competition, commercialisation and scaling up innovation.

Likewise, Prabhu believes that the success of India’s IPR policy will depend on the creation of an ‘ecosystem’ that takes a good idea to its ‘logical end’, crucial to ‘draw global innovators and angel investors’ to partake in India’s transition to a knowledge-basedeconomy. The TPF can be an effective platform to further brainstorm how the policy could create an ecosystem that encourages the IPR generation, enhances their reliability, facilitates commercialisation and values enforcement against infringement.

He should immediately take back three critical messages from the TPF to New Delhi. One, growing price controls on innovative products, specifically medical devices, conflict with the concurrent goal of spurring domestic R&D and attracting cuttingedge US investment. Price controls fail to result in lower prices, decelerate public access to innovation, and force quality domestic manufacturers to instead sell their products abroad to recoup their R&D costs.

Two, there is an urgent need to create an investment climate predicated on consistency, transparency and predictability to signal that patent rights will not be discretionary.

Three, India must take immediate steps to champion creativity by prioritising the passage of the anti-camcording and related copyright laws to arrest the loss of revenue and associated jobs in India’s film industry and to attract foreign creators.

Most importantly, India should actively take steps to leapfrog from a resource-based economy to an innovation-driven, knowledge-based one, with astrong IPR framework. Simultaneously, it will need to create one million new jobs a month to absorb the impending demographic dividend.

In addition to discussing trade barriers, both sides can use the TPF as a platform to advance each other’s mutual priorities. The US administrationhas reaffirmed that a strong India is in the US’ interest. US Trade Representative Robert Lighthizer and his team can support India’s economic transition by sharing best practices on how innovation and IP-intensive industries managed to create over 45 million American jobs and contribute to nearly 40% of the US’ GDP.

On the other hand, with his pro-innovation approach, Prabhu has the unique opportunity to change the calculus of the most polarised discourse in the US-India commercial relationship into one that mutually benefits both US investors and domestic innovators.

Hemal Shah is the senior manager of international intellectual property for the U.S. Chamber of Commerce Global Intellectual Property Center.

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