India's new patent laws bulldoze domestic industry, appease foreign firms

Sometimes a small sentence answers a lot of questions. For instance, Nirmala Sitharaman in reply to a question in the Rajya Sabha yesterday said that the draft Indian Patent policy is almost ready . This is the outcome of a think-tank set up by the government. Interestingly an earlier think tank set up had also submitted a draft IPR policy in October 2014, that was rejected by the government without any reason.

The new think tank has been criticized for being too corporate centric, by public health activists. Moreover, it also seen as a knee-jerk reaction by the government to appease the US government’s concerns around Indian patent laws. ( More about that here. )

These laws not only affect competitiveness of the Indian industry, health and well-being of the nation but even the Make in India plan. There is a global conspiracy at play here and that has to be understood before this draft is approved.

It is through law that the developed countries want to snatch the initiative, establish supremacy, maintain the hegemony of their corporate wealth and create markets. And the next round of trade war will be on a new front: patents. This time as well the developed world, sitting on their intellectual power, will push the rest of the world legally to accept their domination.

Companies in the developed world have lost the manufacturing war to China and other countries. They are fighting a currency war to keep their economies competitive, but their corporate wealth is shrinking and will continue to do so if they don’t win the patent wars.

Take the most valuable company in US. Apple does not make a single product in its factories, its valuation is based on its patents and its ability to reinvent not just products but product categories. This wealth is not just on paper. It resides in 401,000 accounts of almost every American, who may have lost their ability to be employed but still hold equity wealth. That’s why the only way that this wealth can be sustained is if these patents and of other companies in diverse fields are upheld.

Copying a patent is akin to stealing a message that has been drilled into the heart and minds of people. China is the only country that openly scoffs at the hegemony of patents not directly, but indirectly. Chinese companies openly flout, copy or steal patents to manufacture products at much lower prices.

Take any American cola company’s business model. It takes water from public utilities or groundwater. It appoints franchises to bottle and distribute this sugared water. Not owning or investing in anything except massive dollops of dollars in marketing and advertising. And it charges a royalty for its brand name and secret formula from its local operators and subsidiaries. A perverted form of utilizing the patent it has a on a dark sugared water drink. And the Indian government in its annual budget for 2015-16 just reduced the tax on royalties paid by MNCs ostensibly to attract more foreign investment. Tax on royalties was the first battle in the patent wars there is a bigger war approaching and the general public is not even aware of it.

China handles patent disputes in its own way. Any company that wants to complain is told that they can if they want to but they will not be allowed to sell in China ever again. This threat always works as several MNC heads and analysts have told me over the years.

While India is pandering to the US need to protect their outdated patents we must be sure that are we also harming the long term growth of the Indian corporate sector.