Strong IP standards can lead to innovation, which, in turn, can lead to jobs and growth

This article was originally published in the Economic Times on September 14, 2017.

When it comes to promoting innovation, India is already taking the lead among emerging economies. Earlier this year, GoI launched the India Innovation Index, which ranks its states on innovation through an online portal. Then, in June, it unveiled an action plan for the Scheme for Intellectual Property Rights (IPR) Awareness, an important part of implementing the 2016 National IPR Policy.

Now, GoI is working to develop an IP exchange to better capitalise on, and support, existing patents. India’s states are also taking steps towards innovation. For example, Punjab recently welcomed India’s first Technology and Innovation Support Centre —a World Intellectual Property Organisation (WIPO) initiative to stimulate a vibrant conversation on IPR protection.

Emerge and Shine

These innovation-led growth strategies give India the opportunity to serve as an example for other emerging economies. According to a new Harvard University study, India is expected to remain among the fastest-growing economies with an estimated annual growth rate of 7.7% until 2025. Simultaneously, the 2017 Global Innovation Index — a joint initiative by business school Insead, the World Intellectual Property Organisation (Wipo), and Cornell University — ranked India 60 out of 127 countries, indicating steady progress from its rank of 81in 2015.

However, a recent report by Niti Aayog-IDFC Institute that analyses state-wise development shows that job growth, particularly good quality job creation, remains a challenge. India will need to continue reforming to sustain its economic growth trajectory.

It will need to create one million jobs a month, invest heavily in research and development, and integrate into the global value chain quickly. If its economy falters, India risks falling into the ‘middle-income trap’ — the point when rapidly growing countries are susceptible to a loss of economic momentum or even stagnation.

They are trapped in an impasse: they are no longer low-income, low-wage, resource-driven economies, but have failed to make the transition to high-income, high-innovation economies. This is when economic growth plateaus. The Brazilian and South African experiences are cases in point.

To realise India’s innovation vision, and to avoid the middle-income trap, GoI must first fix the gaps in its National IPR Policy: the key to the growth of innovative and creative industries. An effective IPR framework is indispensable to attract foreign investors, disseminate creativity and encourage local innovators to invest in their own ideas.

India can further sharpen its National IPR Policy to realise the innovation-growth relationship by capitalising on specific sectors, such as its flourishing generic drugs industry and the thriving services sector. For instance, the policy should help India foster an environment that welcomes and protects life sciences investments, one that recognises genuine inventive steps in drug formulations.

As for services, the removal of the restrictive novel hardware requirement for computer-related inventions is an encouraging step towards recognising the patentability of all forms of technology. However, greater clarity on patentability can supplement GoI’s ‘Startup India’ initiative.

Furthermore, GoI must follow through on updating legislative infrastructure in a way that enables domestic and foreign innovators to protect their trade secrets and accelerate technology transfers. As GoI looks to address the shortcomings in its innovation and IP policies, it can also examine three opportunities more closely.

First, India can encourage and enhance a streamlined, market-based licensing business model for greater technology diffusion. New research from a joint study by the US Chamber of Commerce and Pugatch Consilium ( indicates a strong relationship between effective licensing and innovative technology diffusion, job creation and economic growth.

Learn From (Their) Mistakes

The study also shares examples from China, Brazil, South Africa and Indonesia, where a mix of administrative hurdles, legal barriers and coercive licensing issues pose serious barriers to technology diffusion. India can innovate by eliminating its peers’ failed policies.

Second, India could consider strengthening its patent system and remove price control mechanisms on medical innovations. According to a 2016 study by the London School of Economics (, policies that strengthen patent protection and remove price controls significantly reduce drug launch time and accelerate drug diffusion.

This data must be taken into consideration, especially as GoI considers extending price controls to more drugs along with the recent inclusion of orthopaedic knee implants to its list of medical devices. Also, additional price controls proposed in the recent draft pharmaceutical policy is at cross-purposes with the ultimate goal of spurring innovative research and improving drug quality.

Finally, India’s transition from pro innovation messaging to innovation-led growth merits the effective communication of benefits to all stakeholders.

The growing introduction of IPR education in Indian law schools is welcome. GoI should collaborate increasingly with foreign law institutions to adopt IPR curricula in line with global best practices. It could work with the private sector to disseminate the positive outcomes of any joint collaboration, including, for instance, Pfizer’s innovation accelerator programme, Qualcomm’s ‘Design in India’ initiative, or partnerships with GoI’s Jan Aushadhi programme.

Strong IP standards can fuel the growth of domestic innovative industries, help attract greater foreign investment and bolster India’s economic prosperity. They can also provide an example to other emerging economies by showing how innovation leads to growth.

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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