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R&D, IP & Standardisation are key elements for an innovative India

R&D, IP & Standardisation are key elements for an innovative India
India is increasingly being recognised as a global innovator. For the first time, it has entered the top 50 innovating countries in the World Intellectual Property Organization (WIPO)’s Global Innovation Index (GII), improving its rank from 81st in 2015 to 48th in 2020. It also ranks third in the lower middle-income economies and first in the Central and Southern Asia regions. This is the result of several government initiatives to strengthen the IP system and innovation such as the ‘National Intellectual Property Rights Policy’, the ‘Accelerating Growth of New India’s Innovation’, ‘Start-up India Initiative’, several favourable tax incentives, as well as significant national investment in research and development (R&D). However, additional changes may be required for India to catch up with the leading economies and fulfil its ambition of becoming the third largest economy in terms of GDP after China and the US.
To start with, there is a pressing need for the private sector to contribute more to innovation. The majority of R&D in India results from government investment (56%), three times more than the average contributed by other countries. Despite large government commitment, India’s gross expenditure on R&D is still 0.65% of its GDP, significantly lower than the 1.5-3% of GDP spent by other leading nations. This missing investment could be compensated by increased R&D from the business side. There is a long way to go since the business sector in India contributes only about 37% to gross R&D expenditure, almost half compared to the top ten economies for the same sector (68% on average).
Equally important is to protect the results of such R&D investments. According to a 2019 study conducted by the Organisation for Economic Co-operation and Development (OECD), none of the Indian companies made it to the list of 50 patent filers globally. According to WIPO, India received in 2019 some 53,000 patent applications, compared to 1,400,000 in China, 620,000 in the US, 300,000 in Japan and about 181,000 in Europe (considering only those European patent applications filed at the European Patent Office). The  Economic Survey of the Indian Ministry of Finance published in 2021 shows that the majority of patent applications in India come from non-residents. According to the survey, Indian residents contributed in 2019 only 36% of filed patents, as compared to 62% on average in the top ten economies. In other words, innovation appears to mostly be driven by foreign companies. Thus, improving the domestic share in patenting should be a priority for India to advance in innovation.
India also ranks low on IP commercialisation. While there is no official data, some estimates are that as little as 3% of patents get commercialised. Not only the business sector, but universities are also minimally commercialising their inventions, and their research appears to be far from the industry demands.
Some initiatives that Indian government could drive to strengthen Indian IP system and boost national R&D efforts, leading to higher innovation to the benefit of Indian economy and society:
  1. Educate Indian companies on the relevance of IP
  2. . Indian government should continue developing and supporting its initiatives to promote the value of IP to companies. One positive step has been the formation of the IPR Exchange, as result of the National IPR Policy to stimulate IP awareness and commercialisation among the private sector. The IPR Exchange is a centralised online platform enabling commercialisation of IPR, aimed mostly at micro, small and medium enterprises (MSMEs). This good practice could be amplified with further IP education and financial support to companies that file for IPR and commercialise their protected innovations.
  3. Promote standardisation. Standardisation is the result of significant R&D investments and produces a wide range of cutting-edge technologies, such as wireless and cellular connectivity. Cellular standardisation is developed in a joint effort of many companies under a consortium of seven standard development organisations called 3GPP. The resulting technologies are typically accessible on fair, reasonable and non-discriminatory (FRAND) terms and conditions. FRAND ensures the widest possible access to companies wishing to use the standard as well as an adequate and fair reward to innovators. As the European Commission recognises
  4. Strengthen IP System. Efficient systems of obtainment and enforcement of IPR are required for greater involvement of the private sector in R&D. According to WIPO, it takes on average 48 months in India to obtain a patent, compared to 22 months in China and the US and 28 months in Europe (the EPO). Regarding litigation, the average length of a patent infringement case is between 12-16 months in Germany, more than 1 year in the UK and between 6 and 15 months in the US, while it can take up to 10 years for a case to be decided by Indian courts. The recent reforms of commercial courts do not appear to have reduced time to judgment. While decisions in Indian courts are generally well founded, the long time needed to secure protection may discourage companies, particularly those with little resources which depend on a return on investment in a timely manner, to invest in innovation. More efficient procedures before courts and the Controller General of Patents, Designs & Trademarks would encourage companies to invest in commercialisation and rely on the system to protect them on a timely manner against free riders.
  5. Financial support for innovative start-ups that have protected their ideas via IP and wish to commercialise them. India already has in place a good tax incentive scheme to promote innovation. Further measures aimed at start-ups and MSMEs, similar to ‘Start-up India’, should provide financial measures and strategic advice to help commercialise their IP both domestically and abroad. For example, the EU has launched a Horizon programme with a budget of EUR 95.5 billion (almost INR 8.5 billion) to support research and innovation, and established a special European Innovation Council to support breakthrough innovation throughout the lifecycle from early stage research, technology transfer, financing and scale up of start-ups and SMEs (MSMEs). EIT Digital, an organisation co-founded by the EU, which brings together large corporations, SMEs, start-ups, universities and research institutions, and supports market uptake and scaling of research-based digital technologies. Other countries also operate special programmes to support start-ups scale up and commercialise their inventions. For instance, Germany has a “German Accelerator” programme to help start-ups to grow globally and successfully enter the US and Asian markets, while Israel has a special Innovation Authority that supports start-ups and mature companies develop new products and enter new markets abroad, as well as academic groups seeking to transfer their technology to the market. Thus, having a centralised approach that helps start-ups from the early stages of development to maturity and expansion can help India’s innovative potential.
  6. Taken together, these measures would strengthen the trust of the private sector in India’s IP system and enable larger investment in R&D, improving India’s place on the global innovation stage.
    By Dr Sheetal Chopra and Dr Claudia Tapia**
    ** Dr Sheetal Chopra is Director IPR Policy and Dr Claudia Tapia is Director IPR Policy, both at Ericsson. The views expressed in this paper are theirs alone and do not necessarily represent Ericsson’s position.
    This is a partnered post. 
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