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:
. 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.
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.
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First Published: IST