India’s Secret Weapon

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.