As a number of recent press articles, including this one from Reuters, attest, the U.S. business community is increasingly taking note of Indian trade practices that impose onerous localization trade barriers and compromise the interests of foreign intellectual property rights holders. In light of this, representatives from a diverse range of business and manufacturing sectors recently sent a letter to President Obama urging him to take a more forceful stand against India’s increasing embrace of “innovation mercantilist” trade policies. For example, as the letter argues, India’s recent “Administrative and court rulings have repeatedly ignored internationally recognized rights—imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications.”
It’s encouraging to see more organizations raising the profile on this important issue. ITIF has been monitoring India’s trade practices for some time now. In March, we submitted testimony to the U.S. House of Representatives’ Hearing on U.S.-India Trade Relations and last month we hosted a media teleconference during which ITIF called on the U.S. government to take a harder stance with India regarding protections for foreign intellectual property rights holders. We have also commented on India’s inclusion in the US Trade Representative Office’s 2013 Special 301 Report, noting that countries appearing on the report should lose their privileges to enjoy participation in the Generalized Systems of Preferences and to receive Millennium Challenge Grants.
India enjoys a tremendous opportunity to invest in its future and grow its economy, but lax intellectual property policies are standing in its own way. Unfortunately, when intellectual property rights are not protected, it has a chilling effect on both rates of domestic innovation and on foreign direct investment into India’s economy. As the letter to President Obama notes, such policies “are counterproductive to India’s stated goals to attract capital and to develop its own innovative economy.” And indeed, they are one reason why foreign direct investment in India, which reached a record $47 billion in FY 2011, had fallen by 67 percent in the following year (through September 2012). Not only would strengthening intellectual property protections improve India’s standing in the world economy, it would represent a long-term win for India by encouraging the domestic innovation and technological development necessary to take the nation from a regional power to a world power and a major market for American-made goods and services.
Both India and the United States deserve to enjoy robust innovation-based economic growth; and there’s no reason that the success of one needs to come at the expense of the other. As ITIF has documented extensively, good innovation policies can promote win-win economic growth, but only if countries pursue policies that promote open, market-based competition. A strong U.S.-India trade relationship is in both parties’ best interests, and to that end ITIF endorses the call for the U.S. government to immediately initiate bilateral engagement with the highest levels of the Indian government to address these issues.