India Beginning To Show Commitment To IP Rights, Now They Must Back It Up With Action

Lorenzo Montanari Executive Director, Property Rights Alliance
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The much anticipated state visit by Indian Prime Minister Narendra Modi to the United States was seen as an opportunity to begin a much needed dialogue between the two nations to improve protection of intellectual property (IP) rights.

The state visit culminated with the release of a joint statement on increasing relations following a meeting between Prime Minister Modi and President Obama. The press release, which can be found here, included a pledge to increase global protections for intellectual property rights. Specifically the post articulated “the need to foster innovation in a manner that promotes economic growth and job creation”, while both leaders agreed to the creation of a high-level intellectual property working group to increase IP protections.

Despite this good news, it is vital that the recently formed Modi government continue to push for IP rights. Already, protectionist groups in India are fighting reform, with some suggesting that Modi has only proposed reform due to extensive U.S. pressure. Others have downplayed the need for reform. In a statement, the Department of Industrial Policy and Promotion (DIPP) dismissed Prime Minister Modi’s reform attempts and stated that current Indian IP policy is already compliant with global standards.

IP reform should not be an issue of India versus the United States, but rather one of free trade and property rights versus protectionist policies. Reform will help bring prosperity to India’s developing economy and will encourage more foreign investment, a key goal of the Modi administration. With a population of 1.2 billion, India is the world’s second largest market. However, many investors have become increasingly reluctant to invest given the reputation for poor property rights protections.

In past years India has become notorious for its disregard for property rights. In multiple cases, New Delhi has attracted international criticism, most memorably for its refusal to address movie piracy and its decision to revoke pharmaceutical patents owned by foreign corporations to give a competitive advantage to local firms.

As a result of these controversies, the U.S. Trade Representative announced last week that it would hold an “out-of-cycle review” of India’s IP regime due to severe concerns with the country. The Indian government has announced it will not cooperate with the review, and it appears likely that both countries will take the matter up during the upcoming India-U.S. trade policy forum.

By implementing strong IP reform in a timely manner, India has an opportunity to gain a competitive advantage over rival developing economies such as China. Like India, China is a rapidly developing economy with untapped potential. However, a major impediment to foreign investment in both economies is their flagrant disregard for intellectual property rights. Recently, China has been doubling down on its protectionist policies with several foreign firms having their offices raided by Chinese regulators, and others being handed hefty fines for price fixing.

Watchers of China fear Beijing’s creation of Ruichuan IPR Funds, a government-sponsored entity that is designed to serve as a “Patent Troll” to impede the innovative practices of U.S. firms. Amid increasing business uncertainty in China, Indian IP reforms could serve as the catalyst for increased foreign investment from firms that have become increasingly wary of destructive protectionist policies in developing economies.

Although India has taken steps to improve its business friendliness, most notably with recent reports suggesting the creation of special courts to adjudicate IP disputes and increase efficiency, it is clear that more can and should be done.

While Modi’s first steps should be applauded, India’s ability to reach its economic potential depends on the success of intellectual property reform in the coming months and years.