July 04, 2020
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Joint Studies, Anyone?

An Indo-US economic plan can prove revolutionary, but it's not without irritants

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Joint Studies, Anyone?
R. Prasad
Joint Studies, Anyone?
  • India and the US think biotech is the only driver to usher in a second green revolution
  • Both eager to tap energy sources like hydrogen, gas hydrates
  • The US wants India to change its patent and IPR regime relating to software and pharma
  • Most legal changes the US wants will open up the sizable Indian market for their companies


It only seemed like a small gesture. After US president George Bush hinted during his 2006 visit to India that he would love to eat alphonsos at the White House, it led to a 'mango initiative' between the two nations. Fifteen months later, in May 2007, the US trade representative Susan Schwab admitted that the arrival of Indian mangoes to America after a gap of two decades "represents more than just a market opening for one product". She added that it "signals the determination of both India and the United States... to create significant new economic opportunities...."

She's right, because mango is a small piece in a grand jigsaw puzzle that's being put in place by the two nations. With all attention focused on the India-US nuclear negotiations, this aspect of the bilateral vision is being missed out. The perception that "the nuclear deal has overshadowed movement in other areas is correct; it is a sad fact that governments can only do one or two things at a time," says Stephen P. Cohen, senior fellow, Foreign Policy Studies, Brookings Institution.

Another reason for the neglect of the ambitious plan is that the riddle is too complex, and most haven't figured out its implications or been able to connect the thousands of policy-related dots. Finally, the key government officials involved in the exercise—like Planning Commission's Montek Singh Ahluwalia—are underplaying it, or feel that the two nations have a long way to go. Says a seemingly uninterested Montek, "It should be moving well. It has not been reviewed recently."

But be rest assured that if—and all ifs are big in the realm of policymaking—the blueprint translates into reality, it will change India's economic landscape. It will embark her onto a new path that will transcend manufacturing and outsourcing. It will convert India into a knowledge economy. More importantly, in one stroke, it will put us miles ahead of China or other east Asian giants. "Nuclear talks is one important element but does not represent the whole broadened economic relations and people-to-people contact that are developing rapidly," confirms a US embassy official.

At a fundamental level, it involves a tectonic shift in the mindset of the Indian government. With critical changes, it aims to usher in technology and innovation-driven transformations in sectors like agriculture, energy, information technology, and research. The new Indo-US vision hopes to lay a knowledge foundation that will allow India to compete as an equal with other knowledge-based economies like Japan, Germany and the US. Earlier this week, the US under secretary for political affairs R. Nicholas Burns hinted as much when he said that the two countries were "exploring a host of technological initiatives ranging from agriculture to civil nuclear power."

Let's get to the specifics of the Indo-US economic initiative. Although a senior agriculture ministry official feels "the US-India agri knowledge initiative has been hyped and there are no major projects or funding commitments," the expected gains are huge. It should reinvigorate the educational system and research to enhance productivity and make best use of resources. To achieve this, select Indian and US institutions have been identified for possible alliances.

Over the last few months, a wealth of knowledge has been garnered by over a dozen young Indian scientists who studied in the US under the (Norman) Borlaug Fellowship, named after the father of green revolution beginning in the late 1960s. Officials in Indian Council of Agricultural Research (ICAR) think that tangible benefits will flow into India through exposure of more scientists to the best of technologies deployed in the US to boost productivity. "This way we don't lose our young boys and girls as they come back to work for us," says an ICAR official.

Citing some successful examples, an ICAR official cites research in India to develop better pigeonpea (legumes) through genomics, while another pilot project for tapping biomass like straw for producing ethanol fuel has been initiated by a young US-returned scientist. India has budgeted Rs 3.5 billion for three years for collaborations in areas such as capacity-building and human resources development, agro-processing, bio-fuel and water management.

The Indian business delegation that accompanied Manmohan Singh to the US in 2005

The fact is people like Montek are convinced that biotechnology is the only driver that can lead to a second green revolution. Since the US is way ahead of India in this field, the latter can learn many lessons and adapt them to Indian conditions. Therefore, the ongoing focus is to create a healthy environment where research flourishes and helps improve seeds that provide higher yields. Burns agreed that "increasing the linkages of US and Indian knowledge base ... is key to our mutual economic growth and prosperity and a goal of our science and technology collaborations."

In energy, there have been many encouraging and "gratifying" developments, feels petroleum secretary M.S. Srinivasan. "Barring renewables, which are still in the R&D stage, intellectual property rights (IPR) are not a big impediment," he adds. So, whether in exploration and production, refinery technologies for modernisation, or improving gas transmission systems, Indian firms face no issues in sourcing technologies from US counterparts.

Similarly, the US has cooperated in India's ambitious programme to explore potential sources of energy like hydrogen and coal-bed methane (CBM) resources. The Americans have also provided information on gas hydrates, expected to be the single biggest energy source in the future. Only four nations—US, India, Canada, Japan—are trying to tap gas hydrates (crystallised gas found in deep sea beds). But Srinivasan is disappointed "India's failed to attract US majors in its oil and gas exploration efforts."

Although IPR is not an issue in energy, it's an important fulcrum for a knowledge-driven economy. Therefore, it's not surprising that the US is goading India—which has excellent laws on paper—to tighten its implementation regime in this respect. But in some cases—like in software and pharmaceuticals—there's a demand by US firms to change the laws more in favour of patent or IPR holders (ie US firms themselves). In fact, this is a sore point in the growing bilateral relationship.

For instance, Microsoft wants a patent regime for software products, a move that's opposed by many Indians. The former's logic is that a patent scenario will lead to more innovation, more ideas, and more products that will revolutionise businesses. Moreover, it will enable India to become the global reasearch hub. As Craig Mundie, chief research and strategy officer, Microsoft, told Outlook: "India should stop resting on IQ, and focus on IP. It has to stop selling human capital and start creating IP. To emerge as a knowledge economy, it has to accord software patents."

Foreign pharma MNCs are unhappy with the fact that India grants patents only for a new compound or molecule, and doesn't recognise incremental chemical innovations. Their argument is that discovery of a new molecule is rare and most of the new drugs are developed through the latter process. They contend that 'incremental' products shouldn't, and can't, be denied patents as it'll scuttle research and prevent the entry of new drugs. Novartis is fighting a case in the Indian courts on this issue.

Unfortunately, patent and IPR has become contentious. Minister of science and technology Kapil Sibal feels, "IPR issues should be overlooked for transfer of energy-efficient technologies to India and other developing nations to meet global environment concerns. " The opponents of the American logic feel that the US is simply trying to bully India to agree to its demands. What's more, if India accedes, it will virtually destroy the Indian pharma and software sectors. According patents to incrementally-innovated pharma products will lead to a host of new patents by MNCs, who will try to prevent the manufacture of its drugs by simply changing the formula a bit in several ways before a particular patent expires. In addition, it's likely to increase the cost of medicines in India.

In a like vein, software patents, believes the anti-Microsoft, open source community, will offer "a monopoly over ideas, which is unfair" and "stifle independent thinking". In an earlier interview, Venkatesh Hariharan, head (open source affairs), Red Hat India, India's near-monopolist vendor of Linux, an open source software, explained that "patents are not required at all. Even copyright is too much of a one-size-fits-all model and has a tremendous limiting factor in a knowledge economy."

But the overriding reason, say critics, for collaborations in research, especially agri-related, is the need for the Americans to use India's biodiversity. When it comes to biotech, the US is ahead in research processes but lacks the ingredients to pursue high-end work. Therefore, it has to join hands with countries like India. Many also think that allowing American research on Indian soil can destroy our bio-diversity or harm it in several ways by the introduction of foreign elements.

What's more, the economic cooperation will help the Americans more than the Indians. The former will be able to sell more goods and services in the huge Indian market. Already, in the last decade, bilateral trade has grown at over 20 per cent annually, and doubled to $32 billion since 2002. The US is India's largest investor, with over $6 billion of portfolio and foreign direct investment, while India has an estimated cumulative investments of just over $2 billion there.

The apprehension is that India might well become a conclave of sorts for the US. The reason: the US has several strategic interests to forge a closer, but an unequal, tie with India. From the US standpoint, India's democracy will be a stabilising factor in the highly volatile South Asian region. Militarily, it can be a counter to China's might. Economically, it can provide a huge market for American products. Diplomatically, India can be a swing factor at multilateral bodies (like the UN).

Still, the thinking at the highest level is that India can manage to deal with the United States as an equal, as is slightly evident from the nuclear-related discussions. As Prime Minister Manmohan Singh, while agreeing that the Indo-US dialogue has increased considerably, said that the significant thing now was that "it is the atmosphere of our dialogue that has changed. We now address each other with the candour and confidence of friends." Seconds Tarun Das, mentor, Confederation of Indian Industry, "The Indian corporate sector is more aware today and is not willing to compromise."



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