[LINK] "India's Smartphone Solution"

[rfmcdonald]

Bloomberg View's Dhiraj Nayyar writes about the weaknesses in Indian commercial technological research, arguing that to be the contender it can be India has to invest more capital and time.

The Chinese smartphone-manufacturer Xiaomi fancies itself a world-beater. Only four years old, the company has already cornered 30 percent of the Chinese smartphone market, the world’s largest. Until last week, Xiaomi looked ready to dominate the huge Indian market, too. But an order from the Delhi High Court delivered those hopes a body blow, forbidding the company from selling most of its devices in India at least until February. Its offense: infringing on patents owned by the more-established Ericsson.

The decision might seem surprising in a country that has long clashed with drugmakers over its generic knockoffs. Just last year, the Supreme Court declined to recognize Novartis’ patent on its breakthrough anti-cancer drug Glivec. The ruling allowed Indian companies to keep selling a copycat version for $150 per month, compared to the $2,000 per month charged for Glivec.

In that case, the courts were protecting the interests of seriously ill patients, who wouldn’t otherwise have been able to afford the life-saving drug. Smartphones are hardly so vital. Yet here, too, a case could be made that affordable technology is a public good in an emerging economy like India. Sophisticated communications technology can help compensate for the country’s woeful lack of physical infrastructure. By enabling online transactions, smartphones can make up for the paucity of bank branches. They can disseminate crucial information about weather patterns to farmers and can even be used to promote primary healthcare and education.

The problem is that the latest technology, whether in pharmaceuticals or phones, is hard to produce affordably without cutting some corners. To its credit, India has developed a patent regime more in line with global best standards than China’s. In the long run, enforcing those laws will serve the country better than the current system of picking and choosing which exceptions might serve the public.

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The only way to develop cheap, cutting-edge technology is to ramp up research and development domestically. India’s record on that front is surprisingly poor. It spends less than 1 percent of GDP on R&D. China spends almost 2 percent, the U.S. 2.8 percent, Japan 3.4 percent and Korea 4 percent. Presumably, as courts more consistently forbid the sale of copycat technologies, companies will have no choice but to increase their internal R&D budgets.