What’s in Today’s Article?

• Background (Context of the Article)
• Change in IP Policy (Key Factors, Comparison with China, Economic Drain from India)
• Conclusion

Background:

• India has a new free trade agreement (FTA) with Switzerland, Norway, Iceland, and Liechtenstein.
• This agreement, called the Trade and Economic Partnership Agreement (TEPA), includes rules about intellectual property (IP) and protecting and promoting investments.
• Before this, India usually discussed IP rules at global meetings like the World Trade Organization (WTO) and didn't make special IP agreements with other trade groups.

Change in India’s IP Policy:

• This change in IP policy isn't just about the EFTA. India might make similar changes when negotiating with the EU and the UK.
• The idea to change IP and investment rules has been discussed for a while.
• A paper from August 2022 by the Economic Advisory Council to the Prime Minister of India suggested speeding up the patent granting process, taking ideas from the U.S.
• However, this paper didn't address the real reasons holding back innovation in India.
• The suggestions seemed more focused on protecting private interests and making money rather than benefiting the public.
• The advisors think that giving IP benefits will attract foreign investment and help India compete with the U.S. and China in technology.
• The paper also compared the number of patents filed by China, the U.S., and India to support its pro-patent stance.
• But it ignored how countries like China, Japan, South Korea, and the U.S. succeeded in technology through state investment and independent innovation.
• Speeding up patents could result in lower quality products.

Difference Between India and China w.r.t. IP Rights:

• In China, the policy space for indigenous innovation was achieved through programs that run in parallel to maximizing knowledge spill overs from FDI.
• This is absent in India and explains why India lags China considerably in independent innovations.
• China could realize its long-term ambitions of self-reliance in technological innovation and scientific research because the state invested in science, technology and innovation (STI).
• STI investments were not coordinated with the creation of IP markets.

Economic Drain from India:

• Most of the patents filed in India after the TRIPS agreement were by foreign companies, showing that India isn't focusing enough on its own research and innovation.
• In fact, 80% of tech patents involving Indian inventors are filed by foreign research centres.
• Compared to other top economies, India has one of the lowest numbers of R&D employees in its business sector.
• A large number of Indians, around 40% of the country's total R&D workforce, work for American companies in cities like Bangalore, Hyderabad, and the National Capital Region.
• Growing Technology Imports: India is spending more money on importing technology, while spending on domestic innovation is going down. For instance, the percentage of spending on domestic innovation dropped from 13.63% in 2000 to 2.18% in 2018.
• Foreign Companies' Influence: Companies like Syngenta and Bayer, based in Europe or EFTA countries, are increasing their control over Indian markets through intellectual property. These foreign companies, along with those based in Europe and the U.S., control the rights and royalties from patents developed with Indian inventors in fields like chemicals and computers.
• Double Cost for India: Indian society is essentially paying twice. First, for educating and training STEM talent and then for paying for imports, royalties, and fees to foreign companies that employ this talent.

Conclusion:

The new IP and investment rules in trade agreements are leaning towards the U.S.'s strict IP rules. This could disrupt the balance between public and private interests in India.

This approach might hinder India's own innovations and instead channel its science and tech talent towards Silicon Valley's innovation systems.