The role of IP in India’s economic growth

India is bucking the downward trend of other global economies. Post-pandemic, the new normal facing countries include inflation and recession. Ripples from the war in Ukraine and the pressure to transition to clean energy have made the process of recovery much harder. 


Yet, India looks like a bright spot in a bleak setting. After surpassing the UK to emerge as the fifth-largest economy in the world, it is predicted to take the third spot beating Japan and Germany by 2027. According to Morgan Stanley, India’s GDP could more than double from $3.5 trillion today to surpass $7.5 trillion by 2031. Research by the US-based National Bureau of Economic Research (NBER) says China and India may become the world’s top two economies by the year 2100.


What’s behind these predictions?  One of the main contributors to this stellar growth is the trade in services – specifically, digital technology that led to global offshoring, advancing the idea of India as the back office to the world. The old order of financial globalization based on international trade in goods that made the industrial world rich has peaked, plateaued, and ebbed. 


In its place is the trade in services.  In his research paper, the economist Richard Baldwin says these new services, ‘ Other Commercial Services’ (OCS), delivered electronically, are profoundly affected by digital technology. India’s IT outsourcing industry is a case in point. Trade in these kinds of services has flipped the old model of globalization on its head, setting India on its upward course. 


The Morgan Stanley report points out that during the two years of the pandemic, the number of people in the offshoring industry in India rose from  4.3 million to 5.1 million. Baldwin’s paper concurs that India’s share of global services trade rose 60 basis points to 4.3% and this is a trend that’s likely to advance. 


Knowledge-based industries are the foundation of India’s success story, which makes intellectual property (IP) protection of its knowledge assets vital. This requires a  modern, comprehensive IP ecosystem. Indian authorities have displayed an awareness of this and a willingness to act,  a few years down the line from when the country’s ITeS sector hit the headlines.


A look at India’s IP ecosystem


The World Intellectual Property Indicators 2019 Report recognized India as one of the top 10 nations in the ranking of the total (resident and abroad) intellectual property (IP) filing activity.

The journey began a little more than two decades ago.

In 1998, India became a member of the WIPO’s Patent Cooperation Treaty (PCT) which provides a pathway to protect innovation in up to 148 countries. This move drove the growth of international patent applications from India from a mere 14 back then to more than 2000 in 2021.

The next policy driver was in 2005 when Indian laws became fully compliant with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This was a major boost to IP filing rates.

Successive governments have continued to improve India’s IP ecosystem to stay abreast of the growth in innovation in the country and across the globe. 2013 saw Indian Intellectual Property Office (IPO) which oversees patent use and awareness education in the country become an International Searching Authority and International Preliminary Examining Authority (ISA/IPEA) under the PCT, joining 20 other countries in fulfilling that role. To support these global forays and facilitate growth, the Intellectual Property Office (IPO) that oversees patent use and awareness education in the country digitized its operations in 2015, setting up an electronic service delivery platform.

The platform provided secure, convenient access to end-to-end online services from the filing of patent applications to live status-tracking and boosted e-filing from 30% to 78%  of patent applications within months of deployment. 2014-15’s new framework also created a new ‘small entity’ category to incentivize MSME innovation.

2018’s National IPR Policy further strengthened mechanisms so that currently more than 4 in 10 Indian inventors file their patents in India compared to 20% earlier. In 2020-21, India also signed bilateral work plans with IPOs in Japan, Sweden, and the UK. Accession of India to Nice, Vienna, and Locarno agreements for. Across the board, these growth drivers have proved fruitful with the number of patent applications going up from 45,444 in 2016-17 to 66,440 in 2021-22. The patents granted in India have gone up from 9,847 to 30,074 during the same period.


Not tech alone: A sector-wise snapshot

Which are the sectors that are spearheading innovation? 

The technology sector remains a predictable star with emerging tech moving center stage here. But tech companies show a preference for filing patents abroad, specifically the US and the Indian authorities are addressing this

Over the past few years, startups have filed the highest number of patent applications in India, heralding the arrival of a new wave of innovation leaders. The authorities have noticed this and offer an 80% rebate on patent filings to startups recognized under the Startup India program.

In 2019-20, knowledge-driven fields like biochemistry, biomedical engineering, and biotechnology, in addition to computer science, electronics and communication filed 15-25% more applications y-on-y. 

These are green flags for innovation across diverse sectors and the last five years have seen a threefold growth in patents granted, pushing India’s ranking in the Global Innovation Index from 81 in 2015-16 to 46 in 2021.


Staying on course for the long term

Patents are not about innovation alone. As seen in the recent stalling of the UK-India FTA due to patent evergreening concerns, patents have a multi-dimensional, strategic impact. They protect the country’s know-how, attract FDI and facilitate foreign trade.

So to continue on the upward economic trajectory India is on today, a robust patent ecosystem that fosters innovation is a pivotal factor. But  India is still lagging behind innovation stalwarts such as the US, Japan, and even China. Hampered by the lack of a skilled workforce, patent applications in India can take up to 5 years for final office action, twice the time taken by leading economies.

Building awareness, encouraging companies and institutions to focus on R&D and bolstering the state-led IP mechanisms are all fronts that can be continuously tackled. The National Institute of Intellectual Property Management in Nagpur which is a part of the Indian IPO ecosystem conducts training programs for stakeholders. The IPO itself engages regularly with industry associations and academic institutions.

At Researchwire, we will be happy to share with you our in-depth knowledge of the Indian IP landscape and support your organization’s innovation journey in any possible manner.

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