Background Note: “Standard Essential Patents, Innovation and Competition: Challenges in India”

by Arpan Banerjee, Jindal Global Law School in Delhi, India

from Volume 7 (2017-2018)

Download this Article in PDF format from The Jerome Hall Law Library’s Digital Repository.

Abstract: In September 2014, a few months after a landslide election victory, the Indian Prime Minister Narendra Modi announced the launch of “Make in India,” an ambitious program designed to turn India into a global manufacturing hub. One of the factors widely thought to be responsible for Modi’s victory was support from India’s “neo-middle class”—a young, newly- urbanized section of the electorate seeking employment and improved living standards but struggling amidst an economic downturn. In a speech inaugurating Make in India, Modi linked the program with the aspirations of this section of society. Modi stated the need to elevate the status of the poor-to-middle class as fast as possible, noting that sixty-five percent of India’s population was aged thirty-five and below. He declared that the “[s]traight answer” to achieve this goal would be to create jobs in the manufacturing sector. He emphasized the importance of Foreign Direct Investment (FDI) for this purpose, terming FDI as both a “responsibility” and an “opportunity.” But Modi conceded that India’s poor rank in the World Bank’s Ease of Doing Business Index—below 130 at the time—was an impediment and had to ideally rise to fifty. Modi thus announced that the government would reduce bureaucratic obstacles faced by investors This has been a key focus of the initiative, and various measures have since been adopted. Make in India was followed by the launch of two complementary schemes in 2015 and 2016 respectively: “Digital India” and “Start Up India.” The stated aim of the former is to transfer India into a “digitally empowered society and knowledge economy,” with one of its pillars being the promotion of manufacturing in the electronics sector. The stated aim of the latter includes “fostering entrepreneurship and promoting innovation.”

Make in India and its allied schemes have yielded some dividends, and India’s rank in the Ease of Doing Business Index recently jumped to 100. Yet various challenges to Make in India exist. Crucially, automation technologies, such as 3D printing, threaten to displace millions of low-skilled jobs. As automation is seen as less of a threat in displacing jobs in electronics manufacturing, there is a case for arguing that a strong focus of Make in India should be the manufacture of electronic products like smartphones, tablets and semiconductors. Although India’s electronics industry is growing at a rapid rate, the industry is heavily reliant on foreign imports—a further reason to prioritize the area within Make in India. However, India suffers from low technological preparedness and weak ICT infrastructure. If India is to make improvements on this front, issues involving innovation and intellectual property (IP), such as technology transfer and licensing, are likely to assume much importance. In this regard, Make in India has identified IP as a key policy component, Digital India has included “IP generation in the area of electronics” as an objective, and Startup India has included the commercialization of IP in its agenda. But none of the parameters in the Ease of Doing Business Index factor in the role of IP. Thus, linking the success of Make in India with the Ease of Doing Business Index may neither capture the concerns of foreign investors heavily reliant on IP protection, nor reflect advancements in India’s IP system.