May 13, 2006

India is Asia's Innovation Center

The Wall Street Journal had this interesting article on India fast becoming the innovation center of Asia. According to it due to our stringent IPR laws which is one of the toughest in the world, more and more Cos are establishing their R&D facilities in India.

India is rapidly evolving into Asia's innovation center, leaving China in the
dust. Its secret weapon? Intellectual property-rights protection. In recent
years, New Delhi has taken big steps to protect these rights, and the results
have been dramatic. It may appear as if India's recent economic rise is solely
due to its low-cost outsourcing opportunities for foreign businesses. But this
is only part of the story.Thanks to international treaties such as the Agreement
on Trade-Related Aspects of Intellectual Property (TRIPS) of the World Trade
Organization, Indian IP laws were significantly revamped starting in the
mid-1990s. In 1994, the Indian Copyright Act was amended to clearly explain the
rights of a copyright holder and the penalties for infringement of copyrighted
software. The law has been called one of the "toughest in the world."These
changes, which significantly ramped up enforcement provisions, will undoubtedly
prove the most important for copyright protection on the subcontinent -- far
ahead of other countries in Asia. The Indian courts have risen to the challenge.
They have taken a broad approach to the applying new laws -- especially to
protect intellectual property in emerging fields such as information
technology.This trend continued last year when India put in place a new patent
law that brought it further into line with international norms. For example,
this law included new provisions that extended patent protection to computer
software and pharmaceutical products. The changes provided new and powerful
incentives for investment, both foreign and domestic, in the creation of new
products in those fields. New Delhi has also improved the operation of its
Patent Office, which handles patent applications. Today, a patent can be granted
in less than three years, as opposed to only a few years ago, where it took up
to an average of five to seven years.As a result, copyright-based industries
such as the Indian IT sector have enjoyed rapid growth. The annual average rate
of growth of Indian software exports from 1994 to 2002 was 48%, marking a
drastic surge from the preceding five years, when the average annual growth was
about 35%. If New Delhi keeps up its commitment to rights protection, the
numbers will continue to grow. Within the next few years, annual revenues from
Indian software exports are expected to reach $50 billion.Furthermore, Indian
entrepreneurs, business and government labs are filing for patents at rapidly
increasing rates. The number of Indian patent applications filed has increased
400% over the past 15 years. Nearly 800 Indian companies submitted international
patent applications to the World Intellectual Property Organization in 2004.
This number may be fairly small by international standards, but is still more
than double the number of Indian patents applied for in 2000. Now, even the
local pharmaceutical companies, traditionally manufacturers of generic versions
of brand-name drugs, are embracing innovation-based business models and seeking
patent protection for their inventions.New Delhi's actions are a stark contrast
to those of others nations like China and Brazil. When it comes to reigning in
the rampant piracy of music, movies and software, these governments are lagging
behind India. But to truly reach their potential for creativity and innovation,
other emerging economic powers could take a few pointers from New Delhi. As
recent history has shown, IPR protection is the secret to success.[
WSJ.com]

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