India must choose wisely on IP

Updated: Mar 31 2014, 10:12am hrs
It is necessary to see Indias troubles with the American industry and the US authorities in a wider framework. Since the pharma sector has been at the core of the ongoing dispute, it would be best to turn to an example from another field. Indias motion picture industry was one wrecked by piracy, including bootlegged video cassettes and later CDs, stolen music and so on. Illegitimate activities led to massive copyright and revenue losses.

In the late 1990s, the landscape began to change as film producers and music composers in Mumbai, where the Hindi film industry is located, realised the opportunity cost. The vast Indian diaspora market, especially in North America and Britain, was being exploited by contraband syndicates, including some based in the South Asian community in New York. If the situation is very different todayand if the intellectual property of the Hindi film industry is being protected in those very North American marketsit is a tribute to the cooperation between Indian and American authorities, including the New York police.

The lesson that flows from this is that a country or an economy that treats the issue of intellectual property (IP) in a cavalier fashion ends up hurting itself in the long run. One day, it will require IP protection for its own needs and find its old rhetoric and arguments coming back to haunt it.

It is in this context that one needs to evaluate Indias low rank in the 2014 index of the Global Intellectual Property Centre (GIPC). Rating IP, copyright and patent protection in 25 leading economiesfrom the US to Singapore, South Africa to ThailandGIPC put India in the last position. In India, there has been anger at this ranking and individual aspects of the report have been disputed. Yet, the overall salience of what GIPC is arguing cannot be entirely dismissed.

Every industrial economy goes through an innovation life-cycle. It begins at the bottom, when there is little or no innovation, when technology is borrowed or pilfered, and when artificially protective measures are used to build local capacities. At some point, the economy begins to grow organically. It moves up the value chain and invests in IP and innovation. The Asian Tiger economies did this in the 1980s and 1990s. China has done it in the past decade. That is why these countries have moved from becoming contract producers to innovators, caring for their own IP and building their own brands.

This is the inevitable path for India, especially if it is to mature into a mass manufacturing economy and provide jobs to its millions. The exact timing and route map may be discussed and debated but the overall trajectory is clear enough. India cannot wish it away.

In the immediate future, Indias insistence that it has nothing to answer for in terms of its IP record is costing it crucial goodwill and investment opportunities. Irrespective of whether India believes these allegations are fair or not, it has to engage with the issue. As Indias entertainment economy, its precision manufacture and automobile components sector, and its IT industry grow and go up the value chain, they will feel the need for IP protection.

Finally, when Indias impressive generics producers move into the big league and make that breakthrough into successful drug discovery, India will want close to the same IP protection that global pharma seeks today.

Even in the short run, there is enough empirical evidence to suggest that robust IP protection and introduction of IP-compliant technology transfer frameworks are big enablers for FDI. Countries with adequate IP protection tend to have a greater level of clinical trial activity by multinational research-based companies. This creates jobs and raises capacities.

Given this, India need not agree to every charge thrown at it, but it cannot bury its head in the sand either.

Bhuvnesh Agarwal

The author is chief medical officer, Vela Diagnostics, Singapore