Our freedom Fighters would have thought that after Independence the country will soon regain the international stature that it enjoyed previously. India and China accounted for nearly one-half of the world income till the seventeenth century. Steel swords and textiles made by our artisans and spices produced by our farmers ruled the world markets. Alas! We are still counted among the ‘developing’ countries sixty years after Independence. Our Prime Minister is mighty happy at being given ‘Observer’ status in G-20 meetings. We have the largest numbers of hungry and illiterate people. The reason for the present continuation of this unhappy situation, in my reckoning, is that we have not demanded dismantling of the patent laws that were so insidiously included in the WTO regime at the behest of the developed countries.
We had a system of ‘process’ patents before we signed the WTO treaty in 1995. Our drug companies had the freedom to make patented drugs with alternate process. There was no prohibition on copying software. We deprived ourselves of these rights under the WTO treaty. Western countries gain most from this arrangement because their companies own most patents. For example, the Office Division of Microsoft earned profit of $9.3 billion on sales of $14.3 billion last year. The company made unprecedented 65 per cent profit on sales. Microsoft is able to make this profit because we have deprived ourselves of the right to duplicate Windows software.
The thinking of Government of India was that the loss borne by us due to the stricter patent laws will be more than made up by the gains in trade. Markets of the developed countries will be opened for our exports such as garments, toys and basmati rice. The developed countries have, for example, removed quotas on garment imports that were prevalent earlier. Import tariffs have also been reduced. Thinking was that we shall make huge gains in exports due to these provisions of the WTO. We did make many gains. Our exports have increased. But this has not translated into profits because the markets were opened not only for us but also for other developing countries. They also made huge efforts to increase their exports. Competition between exporters has led to declining prices amidst increased volumes. Thus free trade has become a loss proposition for us. We are exporting larger quantities to earn same amount of foreign exchange.
The Government had also thought that Indian scientists will make more inventions in times to come. We will then be able to make profits from these inventions just as western companies are doing presently. It was also thought that our adherence to patent laws will encourage western companies to transfer their Research & Development operations to India. Slowly our scientists working for western companies will acquire frontline technologies. The country will ultimately gain from this transfer of knowledge. Some progress has indeed been made in this direction. Many western companies have opened R&D establishments in the country. But the gain to us from these routes has been small. There appear to be three reasons for this.
First reason is that our civilisational focus is not on development of new technologies. We have always put more emphasis on social organisation. We have excelled in the commercialisation of technological inventions made by others. For example, iron was invented in Central Asia about 3,500 years ago. We adopted this technology and developed the Maurya, Gupta and other empires of the classical period. Our Iron Age civilisation prospered for about 2,000 years from about 600 BC to 1700 AD. We did not give much weight to inventions because the profits from these are short lived. For example, ancient Greece and Rome built grand empires on the basis of the new iron technologies. But they did not pay much attention to social organisation. As a result these empires collapsed in about two or three centuries. The Greeks fought wars among themselves and became weak. The Romans became easy-going due to income from loot and were soon conquered by the Barbarians. It seems that this lesson has been imprinted on India’s unconscious mind. We do not give much attention to development of new technologies because we consider the gains from these as short lived. In the result we have made few inventions and gained little from the new patents regime.
The second reason seems to be that development of new technologies has stagnated in the last decade as if a plateau has been reached. No decisive invention has been made after the personal computer and internet in the early nineties. Mapping of human genome, advances in genetic modification and creation of 3-G mobile telephony have not been commercial successes. Indian scientists are as much trapped in this plateau as western scientists and not able to make many inventions.
The third reason is that the trickledown effects of R&D by western companies in India have been small. A friend of mine working for computer major HP developed a vernacular language keyboard. The gains to Indian scientists will be very small if it becomes a commercial success. Most profits will go the headquarters of HP. Indian scientists will have to be content with the salaries they have got. The cream will go to the west and India will only get the buttermilk.
The gains from patent laws that were projected have not materialised. In the result the WTO has become a double loss for us. We have incurred loss in trade because the price of goods has declined due to global competition among developing countries suppliers. We have incurred loss from patents because western companies have sold their goods to us at high prices; and the gains that were projected from indigenous development of technologies have not been realised.
Perhaps the decision to accept the new patents regime in the WTO was justified from a long run perspective. Our civilisational strength lies in production of cheap goods on the bedrock of social organisation. It was okay to hold on to free trade and compromise on patents from this perspective. But this has proven disastrous in the short run. India remains a developing country and is likely to remain so. There was a need to reject the patent laws from a short run perspective and to accept free trade from the long term perspective. But short run losses should not be wholly ignored for the long run gains. A patient of cancer will probably die if only the long term medicine of juice of wheat leaves is given and the affected part of the body is not removed immediately by surgery. Similarly we have suffered because we have only administered the long term medicine of free trade and not take measures to cure the short run disease of patent laws. There is a need to immediately change strategy and seek dismantling and loosening of patent laws in the WTO for realising the dreams of our freedom fighters.
(The writer can be contacted at [email protected])