The Hindu Business Line : Companies must embrace R&D wholeheartedly

Bosch, the German engineering giant, claims in its ad that it registers as many as 14 patents every working day which translates on a rough reckoning into an annualised figure of 3,000 patents or thereabout.

One is apt to wonder whether the company produces products or technology.

The IT major IBM’s website takes pardonable pride in its portfolio of 40,000 active patents which also testifies to the frenetic pace at which patents are applied for and granted in the western hemisphere.

In India, patents granted are a modest 2,000-2,500 per annum with bulk of them being hogged by foreign companies.

Quick conclusions

Two conclusions can be drawn from this information. The western world encourages, nurtures and rewards innovation which is why and how many organisations there churn out patented inventions with the same panache they roll out their wares.

That R&D gets the pride of place in their scheme of things is of course widely known and acclaimed — the Bosch ad says that it spends as much as 7 per cent of its sales on R&D which roughly corresponds to what multinational drug companies also spend on this seminal activity.

The other conclusion, the one that could be rather uncharitable to the patenting regime in the western world, is that patents are granted there rather freely without strenuous application of standards of inventiveness and novelty.

There also seems to be some truth in this third-world worldview, if one may say so, of the patenting regime obtaining in the western world which explains to a considerable extent how multinational drug companies acquire a fresh 20-year product patent for incremental innovation — that to sceptics and detractors is an euphemism for evergreening of patents in perpetuity — whereas countries such as India are loath to be too ready to grant patents for such efforts unless there is indeed a substantial value addition to the existing invention.

Truth lies in between

Trite as it might sound, the truth as always lies somewhere in between — between the gushing enthusiasm of patent authorities in the western world in granting patents almost like distributing lollypops to children and the perceived stonewalling tactics of the developing countries. Be that as it may.

At the risk of being branded a party-pooper, it must be made plain in this connection that while Indian policymakers have indeed succeeded in unleashing the animal spirit of our entrepreneurs, precious little has been done on the R&D front.

Let us face it, our ad spends outstrip R&D budget by a country mile.

The envious growth rate witnessed during the last decade in India, especially in the telecom and financial services industry, is because of foreign technology, in importing which, of course, there is no shame.

But our institutes of higher learning such as the Indian Institute of Science and IITs are yet to acquit themselves well in terms of inventions even of the incremental variety.

Internal brain drain

Bright youngsters emerging out of the portals of such eminent institutes of science and technology are lapped up by the IT and financial sectors resulting in what is described picturesquely by the noted sociologist Dipankar Gupta as internal brain drain.

If India is to make rapid strides in producing cutting edge technology, if not catch up with the western world in this regard which would be a tall order any day, science and technology must be accorded the same pre-eminence that is accorded to management education.

Let us then take a leaf out of Bosch and not botch science education by making it subservient to management education.

The fiscal sops like a 10-year tax-holiday for R&D companies and weighted deduction of 150 per cent on select R&D spends do not seem to have shaken our corporate world from its complacence. Quite a few foreign companies have of course made India their R&D base.

While this may give the much needed exposure to our own scientific community including attractive employment opportunities — sometimes doles to those who agree to become guinea pigs in the clinical trials carried out in India by the multinational drug companies — real progress lies in our own companies embracing R&D wholeheartedly.

Acquiring patents abroad would be more rewarding both intellectually and financially than challenging the existing patents to get a share of the market when the challenge is upheld.

(The author is a Delhi-based chartered accountant.)

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