How is India Innovating Technologically and What is the Reliance on the Patent System?
Posted: 10 Mar 2018
Date Written: March 10, 2018
India’s technology-led growth is often considered as a benchmark for several non-industrialized countries. Even with billions of dollars being injected in creating and protecting new technology, there is still no consensus in economics, business and law on whether intellectual property (IP) rights induce or hinder innovation, especially in developing countries. Engaging at the interface of industrial economics and technology law, my current research is based on one of the first survey-based academic exercises in India to understand in what form technology-led innovation takes place, and how innovators perceive and respond to legal protection (such as patents) and policies. The research findings will hopefully assist policymakers in developing countries that have drawn a lot of flak on grounds of inadequate IP protection and enforcement, on the one hand; and for restricting affordability and access to the poor, on the other hand. This work will provide some answers since there is effectively no evidence-based scholarship that policymakers of developing countries can rely on to formulate their industrial policies. Therefore, to comprehend the dynamics of industrial R&D within the Indian innovation ecosystem, a survey was conducted to systematically collect primary data between 2016 and 2017 from enterprises (manufacturing and non-manufacturing) across industrial sectors, government R&D labs and research institutions. The survey is broadly based on the questionnaire used in EU Community Innovation Surveys, and builds on previous work done by Cohen et al. in 2000 (“Carnegie Melon Survey”), Graham et al. in 2009 (“Berkeley Survey”), European Commission in 2012 (CIS) and Arora et al. in 2014. In an attempt to advance our understanding of how and why Indian enterprises undertake technological innovation, three broad questions, that can potentially have significant policy implications, have been answered in this paper: First, what are the drivers and obstacles of technological innovation, and how do they vary across industrial sectors? Second, which appropriation mechanisms (IP and non-IP) do enterprises rely on to protect returns from undertaking risky R&D and innovation activities? Third, why do (and don't) firms in India seek patent protection and what strategies do they follow to monetize and commercialize their intangible assets? Contrary to public opinion, we found that weak enforcement of intellectual property laws is not considered as an important constraint to innovation in India. We also found evidence supporting the theory that patents are the most effective incentive mechanism for technological innovation in products and processes. However, in line with previous studies, businesses in India also rely on mechanisms that are completely unrelated to the patent system to compete and succeed in the market.
Keywords: India, innovation, technology, patents, R&D
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