India can emulate Japan's post-Meiji transformation by harnessing innovation, embracing change and cultivating a risk-taking culture
In the 76th Independence Day speech on August 15, 2022, the Prime Minister called for innovation with a focus on indigenous innovations highlighting “Jai Anusandhan”.
Innovation is the key to India realising a self-reliant, competitive and USD 30 trillion economy by 2047. Innovation has the potential to unlock major productivity gains and will allow the nation to leapfrog towards higher value-added products and services across sectors.
In the last few years, globally we have witnessed a fundamental and rapid shift from a knowledge economy to an era of artificial intelligence (AI) and virtuality. During the same time, the unprecedented nature and scale of the pandemic affirmed the importance of having an innovation ecosystem for finding new cures — vaccines, medicines and diagnostics.
For a country with a legacy of scientific and technical knowledge base, the private sector in India has previously made modest investments in research and development (R&D). India has taken a different approach to innovation to meet its unique challenges. The transformational digital public infrastructure, starting with the Aadhar platform, is a case in point.
Similarly, against the backdrop of concerns regarding public health, access and affordability of medicines and protecting the domestic industry, India’s approach to innovation in the biopharmaceutical sector is primarily based on public-sector-led collaborative innovation, where the private sector has merely been ‘encouraged ‘to invest in R&D in priority areas.
While in many cases, publicly supported research provides a wellspring of initial discovery, it is the private sector that must develop new technologies and bring them to the market. To be a leader in a rapidly changing marketplace across sectors, private sector innovation is critical.
How does one measure innovation? One way could be to determine how much a company spends on R&D as a percentage of its revenue annually. As patents secure exclusive rights to an invention, the innovative index of a company can be additionally judged by the number of grated patents, patent applications filed, whether the filings are in multiple countries, the quality of the patents and so forth.
The Parliamentary Standing Committee on Commerce’s 161st Report on IPR Regime in India (July 2021) expresses concern that the rate of increase in the number of patents in India in the last four years has been very low compared to the US and China. It goes on to say that this is co-related to the microscopic spending on R&D which is a meagre 0.7 per cent of India’s GDP.
Globally, companies with the highest R&D spend are big tech US companies like Amazon, Meta, Alphabet, Microsoft, Intel Corp. and bio-pharmaceutical companies like Roche, J&J, Pfizer, Bristol-Myers Squibb and Merck & Co. This list also includes three companies from China — Huawei, Tencent Holdings and Alibaba; Samsung from S. Korea; and European automobile manufacturers like Volkswagen and Mercedes- Benz.
Regarding the biopharmaceutical sector, the removal of product patent protection for drugs in 1970 allowed reverse engineering, which led to the exponential growth of the domestic generic industry and helped India be ‘the pharmacy of the world’. At the same time, however, the lack of effective patent protection profoundly impacted corporate investment in R&D and the discovery of new molecules. Zydus Cadila’s Saroglitazar, launched in 2013, remains so far, the only compound that was entirely indigenously discovered.
India has the potential to spur its innovative spirit by leveraging its strengths, embracing change and fostering a risk-taking culture. Japan’s transformation after the Meiji Restoration from being an importer and imitator of foreign technologies, to a global powerhouse in innovation that has defined the world’s technological landscape exemplifies that necessity is the mother of invention.
There is no silver bullet for creating an enabling environment for innovation. Bryce Hoffman in his book Red Teaming shows how disruptive innovation requires critical and contrarian thinking. So, to inculcate the scientific temper and risk-taking and entrepreneurship spirit, there is a dire need to shift the emphasis of our education system from rote memorisation and conformity.
Second, we must vigorously pursue closer collaboration between academia and industry to commercialise innovation. It is a matter of great pride that Prof. Rahul Purwar, IIT Mumbai obtained marketing approval for the first indigenously developed cell and gene therapy for the treatment of cancer.
Last but not least, a robust, meaningful and predictable intellectual property rights system can most optimally provide economic incentives to inventors and investors to invest risk capital in inventive activity — a very high-risk undertaking.
(The author is Managing Partner, Corporate Law Group, a New Delhi-based law firm; views are personal)
