India: Strengthen IP or Miss Opportunity

By Jasper MacSlarrow

In 2010, the then-President of India declared the next 10 years to be India’s “Decade of Innovation.” Promoting innovation means protecting domestic innovators and creators, attracting world-class research and development, and creating and sustaining high-quality future jobs through a robust intellectual property (IP) system.

However, India’s dedication to innovation was called into question today at an event hosted by the GIPC. At the event, Representatives Erik Paulsen (R-MN) and John Larson (D-CT) expanded on the comments made in their letter to President Obama expressing concern over the deteriorating intellectual property system in India. In fact, Reps. Paulsen and Larson represent a broader congressional concern of the potential investment and trade consequences Indian industrialist policy is posing to American innovators, industry, and the economy:

It’s clear that recent policy, regulatory, and legal decisions have deteriorated IP rights in the country, isolating India in the international community. In response to the worsening intellectual property framework in India, the GIPC today released a review, India: The International Outlier on IP, to provide a succinct and evidence-based analysis of the consequences of India’s poor IP environment.

020797_GIPC_India_Outlier_226x288pxMany studies have pointed to the direct, positive relationship between the strength in intellectual property rights and the inflow of foreign direct investment (FDI), which is an important broad measure of a country’s attractiveness for investing and doing business. The Organization for Economic Co-operation and Development (OECD) found that a 1% change in the strength in a country’s IP rights environment is associated with a 2.8% increase in FDI inflows.

In our review of six key indicators, we found that beyond posing challenge for international innovators, India is in fact squandering immense opportunities to move its own economy into a 21st century powerhouse:

  • India has been less able to attract FDI than its BRIC (Brazil, Russia, China) peers since the 1980s.
  • Also in regards to FDI, India is noticeably weaker than other emerging economies, which started off at similarly low levels of investment and had similar IP rights environments to India’s in the 1980s.
  • Using the OECD model, if India were to strengthen its intellectual property regime and increase its score on the GIPC IP Index by 14.9%, it could reach the level of FDI similar to its BRIC counterparts.

The good news is that it doesn’t have to stay this way. India is well-positioned to become a leader in the global economy, but it cannot—I repeat, cannot—get there without robust, enforceable, and meaningful protection for the intellectual property rights of innovators, foreign and domestic.

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