ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Innovation Performance of India’s Computer Software Services and Pharmaceutical Manufacturing Industries

While pharmaceutical and computer software industries have achieved considerable international acclaim, their growth performance so far has been primarily thought of as driven by labour arbitrage than by innovation efforts. This is especially so in the case of the software industry, where replication rather than innovation has been identified as the cause for its fast export growth. The number of innovations in both industries is rising, contributed chiefly by domestic firms in the former and foreign firms in the latter.

The author acknowledges the contribution of IPICT project coordinated by Kazuyuki Motohashi, University of Tokyo. Excellent research assistance was provided by S M Mohanakumar. The usual disclaimer applies.

India is on the path to becoming a host for high-technology industries—manufacturing or services. High-technology exports in India’s commodity exports have increased from virtually zero in the 1990s to almost 11% in 2021 (World Bank 2022). More than 50% of our services exports can now be
considered high-tech (World Bank 2022). The two industries that can enable the country to be launched into the club of high-technology are its pharmaceutical manufacturing and computer software services industries. Mani (2010 and 2014) has shown that much of the innovation output of the country, as indicated by patents, has gone towards these industries, especially when foreign patenting (read as at the United States Patent and Trademark Office [USPTO]) by Indian inventors is considered. Changes in the international governance rules concerning patenting, especially the trade-related intellectual property rights (TRIPS) compliance requirement, which India had to implement in 2005, have imposed new challenges to
the pharmaceutical and computer software services industries. Measuring innovation is an imprecise affair, and it is usually done using a variety of conventional indicators (research and development [R&D] expenditure, patents granted, etc) and a whole host of new indicators such as those thrown up by innovation surveys. The paper will assess how the two industries have negotiated the challenges imposed by changes in international governance rules affecting intellectual property rights (IPRs). This is accomplished by evaluating the innovative performance of the two industries. The analysis will then distil out industry policy priorities to improve their respective innovative performance.

Motivation for the Study

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Updated On : 28th Nov, 2023
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