The current business environment calls for a robust ecosystem where ideas are domestically created, protected and commercialised systematically
The Indian economy has grown quickly over the last couple of decades, surpassing $2 trillion in its GDP. Yet it faces many barriers—from unemployment to poverty to income disparity—on the road to becoming a true knowledge-based economy. As eminent economist Amartya Sen noted, a nationwide equitable distribution of improved capabilities will lead to a higher quality of life. To this end, India has to expand its manufacturing base, develop strong institutions to empower its citizens (both economically and socially), and transform itself into a knowledge-based economy where innovation is the chief driver of economic growth. The 1991 economic reforms launched India’s development trajectory by growing the FDI from 0.03% of GDP in 1991 to 3.55% in 2008. The growth in FDI inflows, however, has stalled at 1.7% of GDP. This declining trend in inbound investment threatens India’s overall growth rate and the current government needs to prioritise its innovation policy. Innovation, technology development and commercialisation are crucial to India’s sustained economic growth story.
Since the new government was elected to power at the Centre last year, a number of initiatives have been introduced to strengthen the economy. Prime Minister Narendra Modi has introduced three ambitious programmes: Make in India, Digital India and Skill India, envisaging the role of these initiatives in creating jobs, empowering citizens and creating a knowledge-based economy. Make in India aims to attract foreign investment in order to establish India as a global manufacturing hub to push infrastructure growth, especially the physical capital that is required to generate employment across all sectors. Digital India is aimed at digitising the whole country and creating a robust e-infrastructure to complement the physical infrastructure to achieve Modi’s long-term economic goals. Skill India is aimed not just at skill development and training but also at promoting and developing entrepreneurship skills in the country that will allow domestic grass-root innovators develop new ideas and build businesses around them.
While Make in India, Digital India and Skill India will further India’s economic growth by stimulating job creation, alleviating poverty and preparing its workers for 21st century jobs, the Modi government has not adequately addressed the innovation and IP policies which will foster innovation and turn India into a technology leader rather than a follower.
A Knowledge India initiative needs to take hold. India is at a stage where importing foreign technology can no longer sustain its economic progress. India’s current business environment calls for a robust ecosystem where ideas are domestically created, protected and commercialised systematically. A fitting way to meet this need is by building a robust IP rights regime that will lay the foundation of a knowledge economy. While the Modi administration has begun a number of IP initiatives—including the development of a National IPR Strategy—India ranks very low in IP rights implementation.
Investors need assurances that their investments will be protected when entering a new market. More robust IP protections, working hand-in-hand with Skill India, would provide that legal certainty, which, in turn, attracts greater FDI and fosters local innovation. The creation of an efficient legal enforcement system, coupled with education initiatives to stimulate awareness about the importance of IP rights, will be critical to creating an environment where MNCs and domestic firms can thrive. As the government looks to improve the ease of doing business in India, it must not overlook the importance of IP.
The government’s initiatives to cultivate growth and development are laudable. It is important to realise that these schemes need to be coupled with an improved administrative and regulatory framework in place, especially with respect to IP rights which will provide an attractive environment for potential innovators and investors. A pro-IP mindset coupled with an efficiently functioning innovation ecosystem that respects IP rights is vitally important. Recent initiatives such as the Draft National IPR Policy and the establishment of the US-India High Level Working Group on IP are positive steps in this direction but much work remains to be done. The government programmes and an improved IP system will work complimentarily towards achieving the goal of transforming India into an economic superpower.
The author is executive director of international intellectual property for the Global Intellectual Property Center (GIPC) at the US Chamber of Commerce