Intellectual Property and Innovation: Changing Perspectives in the Indian IT Industry

Abstract

Indian government has undertaken significant modifications in the Intellectual Property (IP) regime of the country. This is leading to a realignment of business strategies by firms in several sectors. Similarly, with liberalization and globalization, new opportunities for IP creation seem to be emerging for Indian firms. Unfortunately, writing on these issues has been more emotional and few are willing to look at the issues dispassionately and in a pragmatic manner. A more informed debate on what is required in the new Intellectual Property Act to facilitate active participation of Indian firms in the global technology and production networks is desirable. Given the fact that IT is a growth sector for the country, one needs to assess the utility of various TRIPS compatible policy alternatives. In this context, this paper attempts to document the emerging perspectives vis-�-vis IPRs in the Indian IT industry and explore factors that are driving the change in perspectives. This paper suggests that: Perspectives on IP are changing rapidly: Large IT firms and firms in high-end niche areas are proactively seeking IP-based growth strategies. While they typically seek IP protection in Western nations and not so much in India, this has led them to perceive restrictive IP regimes more positively. IP regimes in the West are more relevant for IP creating Indian IT firms today but this may change in the near future as Indian market expands. Significant IP creation by MNC subsidiaries in India is also contributing to this change in perception. Survey data show that an average IT firm in India also perceives IP protection as an important appropriability mechanism, but access to markets and relevant complementary assets continue to be more important for appropriating profits from their economic activity. The demands for IP policy change reflect these changing perceptions: A positive view of the restrictive IP regimes also gets reflected in the demands of Indian industry associations for changes in the Indian law. Broadly, these changes in perceptions seem to be linked to the evolving global production networks, changing activity profile of Indian IT firms, emerging business opportunities, and changes in the competitive scenario. The understanding of Indian IT firms of the complexities of IP regimes remains rudimentary: Indian firms need significant preparation to deal with IP-related challenges. The policy choice among available TRIPS compatible options needs to be careful: Policy needs to facilitate the participation of Indian IT firms in emerging complex segments of the sector and contribute to new IP creation. This requires a systematic understanding of trends in technologies and global production networks to ascertain the segments in which Indian firms can potentially participate effectively and move up the value chain. However, it also needs to ensure that this sector is not mired in unnecessary IP-related litigation instead of unleashing impulses for creating new enterprises in the sector and for sustainable growth of the incumbents.