What does the IPR payment include?
According to the IMF, the payment of the accounting system for IPRs includes payments made by the licensee to the owner, for the use of the intellectual property, which can be described as fees, commissions or royalties, etc.
Intellectual property can be industrial or commercial, such as patents, trademarks, copyrights, industrial processes and designs, including trade secrets, franchises, etc. These rights may arise from research and development, as well as from marketing. Other types of intellectual property are embodied in originals or prototypes produced, such as copyright in books and manuscripts, computer software, cinematographic works and sound recordings. It can also be related rights, for example for live performances and broadcasting on television, cable or satellite.
However, software and audio-visual content whose use is permitted but not reproduced or distributed are classified as computer and audio-visual and related services by the IMF for the preparation of balance of payments data. These products, although essentially intellectual property in nature, are considered under separate headings for IMF accounting purposes.
A practical example of payment for the use of intellectual property may be the royalty paid by Hindustan Unilever to Unilever for the use of certain brands like Magnum or Pears. While the purchase of Microsoft 360 Office suits by an individual would qualify as IT services because the user is not allowed to distribute the software or reproduce it.
Why is India slow to generate revenue from its intellectual properties?
In 1981, India paid about $15 million in fees for the use of foreign intellectual property rights. In 1991, this expenditure increased to approximately $49.5 million and to approximately $317 million in 2001. The payment for the use of foreign IPRs was approximately $2,819 million in 2011, which tripled in 2021 to reach approximately $8,631 million.
On the other hand, India received $0.11 million in 1981, $0.61 million in 1991, $37 million in 2001, $302 million in 2011, $870 million in 2021, d foreign entities for its own IPRs.
Clearly, India spends a lot using foreign IP rights, while not being able to get much out of its own IPs. However, it should be noted that most intellectual property laws, with the exception of the Copyright Act 1957 and the Patents Act 1970 (as amended in 2005) were enacted in 1999 or later. Even the Trademarks Act 1999, as amended in 2010, allowed Indian entities to register their trademarks in 97 countries by filing a single application form.
The ease of filing applications may also have contributed to the low number of IPR applications filed and then granted, as the filing process only picked up speed after the digital revolution in India. For example, in 1997-98, only 10,155 patent applications were filed, of which only 1,844 were granted patents. In 2010-2011, 39,400 applications were filed and 7,509 obtained patents; and in 2019-2020, 24,936 patents were issued out of 56,267 applications filed.
Even when it comes to brands, very few Indian brands are as strong as the global companies that have had a huge head start over Indian brands. Coca-Cola has been around since 1886. And the Indian subsidiaries of these foreign conglomerates end up paying hefty royalties to their parent companies for using brand names like these.
The way forward for India
Even though India may be slow to catch up with countries like the United States which earned $1.24.827 million in 2021 from fees for the use of their intellectual property, it is ahead in terms of revenue from intellectual property. computer, telecommunications and information services. Much of these services involve intellectual property, although they are classified differently for the purposes of the IMF’s balance of payments data.
In 2021, India earned an estimated $1,19,524 million from providing IT, telecommunications and information services to the world, while the United States earned $58,141 million. And mainland China (which excludes Macau and Hong Kong) earned about $50,722 million from the same services, while it paid about $46,848 million for the use of intellectual property owned by foreign entities. , in 2021.
However, IPR-related payments cause a huge tax bite in India, as expenditures related to fees for the use of foreign IPs increased by 56,862% between 1981 and 2021. This requires introspection by government agencies, Indian business entities, creative businesses. , research institutions and many other actors responsible for the intellectual vigor of the nation.
A country’s intellectual properties are not only a reflection of its creativity and curiosity, it is also an echo of how the government and its people cherish those who have achieved greatness in business, arts, sciences, technology, etc. , by their ingenuity and perseverance. Ease of obtaining intellectual property rights, fair compensation by the market for ingenious achievements, pride and respect for indigenous brands, all must come together to close the huge gap between what India pays for intellectual properties of others and what it receives for its IPRs from the world.