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It’s time to ratchet up India’s intellectual property stance

With America’s growth slowing, India can provide the manna for reinvigoration, not just for the US but also global innovation, writes Chirantan Chatterjee.

ht view Updated: Jan 17, 2015 23:20 IST
Chirantan Chatterjee,Niti Aayog,Make in India

In a few days, United States President Barack Obama will be in India and the thrust of his discussions will focus on participating in India’s growth agenda. Clearly, structural changes in governance are going to be the key. The formation of the Niti Aayog and initiatives like ‘Make in India’ constitute complementary levers. Alongside, one wonders if the country is ready for a ‘Create in India’ call as well.

A short primer on the economics of ideas might be in order. Economist Paul Romer and his colleagues have discussed that ideas, key to economic growth, are non-rivalrous (NR) and potentially non-excludable (NE), this complicating designing their markets. NR implies that one’s consumption of a certain idea doesn’t foreclose its consumption by another. NE implies that unlike an encrypted code in a software, ideas unless protected through intellectual property (IP) are difficult to exclude from being used by others. NR in ideas gives rise to increasing returns (IR).

With NE, IR implies that unless a priori incentives are provided, inventors might be demotivated to ideate, knowing that returns from ideation will be minimised with competition from imitators. And thus, market failure in ideas demands the creation of policy-based incentives to innovate, such that they do flow into the economic system, for example with protection from mandated IP. Now, IP does imply granting State-legitimised monopoly rights and in contexts like India, given issues around access and affordability, therein lies the challenge in issuing a ‘Create in India’ call as well.

For over two decades now, since the government signed the WTO-TRIPS agreement, the country has managed to invoke a less than favourable view from many globally on enforcement and protection of IP. This is now turning away investors from IP-leveraged technology ventures, destroying minimal incentives that might remain for innovative domestic medicine firms or complicating life in other creative good sectors like through piracy of movies in Bollywood. Lyricist-poet-director Javed Akhtar has lamented the state of India’s copyright protection showing how vexed the issue remains. Yet, if claims on India’s historical prowess in creation and ideation need backing up, there can be no better timing than now to ratchet up the country’s IP stance. Initial signals align in that direction. In its report, the IP Rights Think Tank of the department of industrial policy & promotion mentions the need to harmonise the idea of Srijan Bharat (or Creative India) with other initiatives of the Centre. Some naysayers might argue over whether the timing is right. The case against strong patents is building up in the Western world, given empirical evidence documented by several Western economists. Theoretically though, the notion of NR, NE and IR remain irrefutable.

With some gumption, perhaps then, New Delhi’s policy-makers can seize on this as a strategic opportunity as well. With the US’ economic growth slowing given faltering innovation and associated headwinds, to quote Northwestern economist Robert Gordon, India can provide the manna for reinvigoration, not just for the US but also global innovation. Should that indeed happen, several diaspora Indians who attended Prime Minister Narendra Modi’s 2014 speech at the Madison Square Garden will concur, as will Christopher Nolan, given his extolling the Indian surveillance drone in Interstellar. It might impinge in the short run on access and affordability in a country like ours but with a measly rank of 14 (out of 24, behind economies like Laos, New Zealand, Indonesia and Malaysia) in a recent Creative Productivity Index, the country’s Srijan-enthusiasts certainly deserve more.

Chirantan Chatterjee is on the faculty at the Indian Institute of Management, Bangalore

The views expressed by the author are personal

First Published: Jan 15, 2015 22:31 IST