India's IP creation growing, albeit slowly: Zinnov

NEW DELHI, INDIA: While IP creation is witnessing steady growth in MNC R&D centers, investments in R&D and patent activities in India are still relatively slow when compared to other developed and emerging geographies, finds a new study by Zinnov.

In its latest study, titled Enhancing the IP Quotient in MNC R&D centers, it highlights the current state of IP generated by MNC R&D centers India and the initiatives being taken to boost IP activity through collaborations in the Indian ecosystem.

While India spends 1.0 per cent of its GDP on R&D, countries like Israel (4.2 per cent), Japan (3.7 per cent), U.S. (2.7 per cent) and China (2.0 per cent) have dedicated larger spends on R&D and innovation. In terms of industry sectors, pharma, biotech and computer technology companies are leading contributors to IP creation in the country, whereas pharmaceutical and biotech companies alone contribute to 30 per cent of the patents filed from India (2007-2012), the study reveals.

Foreign firms with R&D operations in India, in particular, are playing a key role in the growth of patenting activity in India. USPTO patent grants received by leading MNC R&D centers in India have grown exponentially, at a CAGR of 41 per cent in the last five years to cross 3,800 patents in 2007-12. The report adds that everal global, high impact IP creations are now coming out of MNC R&D centers in India. Adobe's PageMaker 7, Cisco's ASR 901 Cell site router and GE's portable ECG machines, among others, represent some of the locally crafted products that have found global uptake.

Although the US patenting trend is improving, the MNC R&D centers in India contribute just 2 per cent to the global patent grants received by the company despite having a critical mass of local engineering talent.

In addition, the average patent density (number of patents per 100 R&D employees) of global centers in China and Israel is 2-3 times more as compared to that in India. To bridge this innovation gap, the report details on how MNCs are actively collaborating and leveraging the growing innovation competence that exists in the India ecosystem, including in universities, government R&D labs and start-ups.

The Government of India specifically, being the largest R&D spender in the Indian economy, is taking multiple initiatives to drive R&D in the ecosystem. Leading government entities like CSIR, DRDO, ICAR, Department of Biotechnology and the Department of IT are among the top Indian applicants for patents among scientific and research development organizations.

CSIR alone has close to 2800 patents granted till date and contributes to highly qualified S&T manpower by producing 500 PhDs each year. Several MNCs have collaborated and entered into JVs to leverage the research capital of the government R&D labs in India. Some of the recent examples include the Swedish aerospace and defence behemoth SAAB's JV with HAL for developing electronic warfare systems.

In addition, the ability of Indian universities to generate a large pool of engineering talent year after year has ensured a critical mass to pursue varied innovations, states the report. Several MNC R&D centers in India are leveraging the increased research focus in universities to co-create and innovate. Bosch, P&G, General Motors, Yahoo, Texas Instruments & Mercedes-Benz are some leading organizations sponsoring research on innovation in Indian universities.

Commenting on the potential for the IP creation in India, Preeti Anand, engagement manager, Zinnov, said, "The IP landscape in India is expected to improve with the rapidly evolving ecosystem and multiple opportunities in key growth verticals. With several top-notch innovations coming from India in the recent past, innovation in India is expected to accelerate driven by combined efforts of all ecosystem players."

The report also brings out how current business challenges including increased competition, margin pressures, attrition and inflation, among other factors, are forcing Indian IT services companies to look at non-linear models of growth.

TCS and Infosys, in particular, have been at the forefront of building strategic R&D alliances with ecosystem partners, including MNCs such as Alcatel Lucent, Hewlett-Packard, Intel, SAP, British Telecom and Alstom, to strengthen their non-linear strategies.

In addition, the growing start-up community in India backed by strong VC and Angel ecosystem is presenting opportunities for R&D collaborations. Few MNCs such as Microsoft and Intel are looking to engage with start-ups through multiple models that include evangelism programs, venture fund investments and advisory networks. This is fuelling the growth of innovation and encouraging other companies to follow suit, the report concludes.