Indian Prime Minister Narendra Modi’s inaugural visit with the Trump administration is more than an opportunity to continue the US-India dialogue; it’s an opportunity to improve relations and remove long-standing obstacles. Working together, the US and Indian governments have the opportunity to begin bilateral relationships afresh and move forward in the global economy together. This can only take place if both countries make concrete commitments to fostering the innovation that will propel that growth.
As one of the fastest growing economies in the word, India is an important economic partner for the US and a significant commercial partner for American companies. The World Bank estimates the Indian economy will continue to prosper, with a projected increase in GDP of 7.2 per cent in 2017-2018. With a consumer-base of 1.3 billion people, foreign companies are eager to unleash the vast potential the Indian market holds. Recognising the global interest in the Indian economy, PM Modi introduced the Invest India campaign to help attract new businesses.
Yet, in order for India to harness its full economic potential, the government must take steps to ensure that foreign companies are treated fairly in India, including through intellectual property protections. An effective intellectual property (IP) framework, working in tandem with a transparent legal and regulatory system, is one of the critical factors that businesses evaluate when considering investing in new markets. IP is the lifeblood of the innovative and creative industries, fuelling investments in new life-saving cures and the latest high-tech devices while also safeguarding consumers from dangerous illicit products. If India is to take advantage of the opportunities to engage in new dialogue with the Trump administration, the government must take seriously US industry’s concerns regarding India’s IP framework.
The Trump administration has built its trade policy agenda around the need for free and fair trade. The US government efforts have focused on ensuring that American companies receive the best treatment in markets abroad. This is where Indian policies have come under criticism: The economic and commercial barriers to US companies attempting to operate in India have placed them at a disadvantage. Chief among those barriers are the long-standing issues with India’s IP framework.
PM Modi has acknowledged the critical link between IP and innovation. In May 2016, he released India’s first National Intellectual Property Rights (IPR) policy, which included a number of positive administrative changes and called for the creation of IP education programmes. Just weeks ago, the Department of Industrial Policy and Promotion (DIPP) announced a new “Scheme for IPR Awareness” to fulfill one of the tenants of the IPR policy. We cannot underestimate the significance of this step forward; an effective IP framework begins with educated consumers at its core.
The US Chamber’s International IP Index, released annually since 2012, highlights some of the IP-related barriers that innovative and creative companies continue to face in India. Many of the long-standing challenges remain the same: Online and hard goods piracy continues to plague the Indian market, undermining the economic contributions of India’s thriving film industry. The biopharmaceutical industry continues to face challenges in securing and maintaining patents. Most notably, Section 3(d) of the Indian Patent Act, which mandates that products must demonstrate “enhanced efficacy” in order to be patentable, undermines the growth of biopharmaceutical innovation in India.
New IP challenges have also emerged. In 2015, the Indian government passed balanced and reasonable guidelines for computer-related inventions (CRIs), which allowed for the patentability of all forms of CRIs. In 2016, those positive guidelines were withdrawn and re-released as final with a requirement that software can only be patentable if it’s tied to a novel hardware invention. In an ever-evolving digital age, patentability for all forms of software will be critical to fostering technological innovation.
Additionally, Indian officials have made numerous attempts to undermine patented treatments and, more recently, medical devices. Last February, the Indian government’s National Pharmaceutical Pricing Authority (NPPA) passed mandatory price controls on medical stents, reducing the price by 85 per cent, after the Indian Health Ministry added them to the National List of Essential Medicines (NLEM). PM Modi applauded the NPPA’s policy, which had a devastating effect on innovative medical companies seeking to launch or maintain the sale of their products in India. The move also creates a slippery slope, with other medical innovators wondering if the NPPA will revive talks of targeting patented medicines in similar fashion. Such policies would undermine the legal certainty upon which biopharmaceutical innovators depend and jeopardise investment in new, life-saving cures in India.
If India is to create an environment which fosters innovation, encourages international cooperation, and cultivates a business environment welcoming to investors, IP will be critical. The Chamber’s Index illustrates how countries with top-notch IP frameworks are also more likely to have access to venture capital, create thriving high-tech sectors, and become true knowledge-based economies.
Now is the time for India to alter its course and pivot toward one which fosters respect for IP and unleashes the economic benefits that strong IP frameworks provide.