Indian Journal of Law and Legal Research Volume VII Issue II | ISSN: 2582-8878
INTELLECTUAL PROPERTY RIGHTS AND ITS IMPACT ON
INDIA’S ECONOMIC GROWTH
Ms. Gunjan Tiwari, B.A. LL.B. (H), Amity Law School, Noida
ABSTRACT
The economic landscape of both industrialized and developing countries is
greatly influenced by intellectual property rights (IPR), which promote
investment, innovation, and technological development. In a nation like
India, where knowledge-based industries are becoming more and more
important, IPR are a means of fostering economic expansion. Economic
development and intellectual property rights are interdependent; robust IPR
protection encourages innovation, which raises industrial output, creates
jobs, and increases competitiveness internationally. India underwent a
dramatic change in its legal and policy position with its entry into the
international IPR system, particularly after signing the TRIPS Agreement
under the WTO. Positively, IPR has made it possible for Indian businesses
to grow globally, safeguard innovations, and improve brand value.
Additionally, traditional Indian goods like Pashmina wool and Darjeeling tea
have been protected by the Geographical Indications (GI) Act. IPR is not
without its problems and critics, though. Public health concerns are raised by
the fact that tight patent restrictions. Furthermore, the effectiveness of IPR
enforcement in India is still hampered by problems like counterfeiting,
piracy, and protracted legal proceedings. The article examines these complex
effects of IPR on the Indian economy using policy analysis and real-world
examples. The study comes to the conclusion that although intellectual
property rights (IPR) are an essential tool for economic advancement, their
application must balance promoting innovation with protecting the general
welfare. India can achieve inclusive and sustained economic growth with the
help of a well calibrated IPR framework.
Keywords: Intellectual Property Rights, Interdependent, Innovation,
Economic development Technology.
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Introduction:
The modern global economy has made intellectual property rights (IPR) a crucial part of
development strategies and economic policies. Intellectual property protection has become a
top priority in a knowledge-driven world where technical advancement, creativity, and
invention are major forces behind success. IPR is the term used to describe the legal rights that
are bestowed upon people or organizations over the products of their imagination, such as
inventions, literary and artistic works, names, symbols, and designs. Because of these rights,
artists can profit from their creations, which promotes ongoing investment and innovation. The
function of intellectual property rights (IPR) is especially important for developing nations like
India since it has a direct impact on technology transfer, industrial growth, foreign direct
investment, and general competitiveness in international markets.
Economic reforms and engagement with the international trade system have been key
components of India's path toward fortifying its intellectual property rights framework. India
made significant progress toward updating its IPR laws to conform to international norms with
the signing of the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)1. Wide-ranging effects of this change have been felt in
industries like entertainment, information technology, pharmaceuticals, and agriculture. In the
pharmaceutical business, for example, more investment in R&D has resulted from stronger
patent protection, making India a significant hub for the production of generic medications and
promoting innovation in drug discovery.
Additionally, Indian innovators and entrepreneurs have benefited from a strong IPR framework
by being able to defend their concepts, establish their brands, and compete internationally. The
goals of government programs, such the National IPR Policy, have been to raise awareness,
expedite registration procedures, and encourage an innovative culture. Notwithstanding
obstacles such as public awareness and enforcement concerns, it is becoming more and more
clear that IPR contributes to India's economic development. The efficient use and enforcement
of IPR laws will remain crucial in determining India's developmental trajectory as it strives to
become a knowledge-based economy.
1
Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299.
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Importance of IPR Laws:
Laws pertaining to IPR are crucial for promoting investment, innovation, and the
commercialization of discoveries. For a set amount of time, they give artists and inventors the
only right to use their intellectual property, allowing them to profit from their labor. IPR laws
provide the framework for the development of a knowledge-based economy in a fast rising
nation like India, where intangible assets like technology, branding, creative works, and
traditional knowledge are becoming more and more important for social and economic success.
R&D is encouraged by IPR protection, especially in fields like biotechnology, information
technology, pharmaceuticals, and the creative industries. In addition, increased innovation
outputs, industry-university partnerships, and foreign direct investment have all been
associated with stronger patent regimes. Strong copyright and trademark regulations also
encourage the development of the cultural and creative economy by protecting authors,
musicians, filmmakers, and artists and fostering the expansion of businesses and brands. IPR
regulations have an enormous effect on the welfare of society in addition to encouraging
innovation. They can play a key role in preserving biodiversity, traditional knowledge, and
indigenous cultural expressions—all of which are extremely significant in India. By
recognizing distinctive products like Darjeeling Tea or Pochampally Ikat, the Geographical
Indications of Goods (Registration and Protection) Act, 19992, for example, significantly
contributes to the preservation of regional history and the growth of rural economies. But the
significance of IPR laws goes beyond economic factors; they play a vital role in ensuring that
everyone has fair access to public goods and information. The difficulty is in creating and
implementing IPR regulations that safeguard creators and innovators while still guaranteeing
the public's continued access to necessities like reasonably priced healthcare and education.
India's IPR laws must therefore strike a balance between the public interest and private rights
in order to protect the country's socio-cultural fabric and encourage inclusive growth.
IPR’s Impact on Economy:
IPR has a huge impact on economic development processes, and its evolution is complicated
by several reasons. IPR's goal is to incentivize owners to sell their inventions and concepts in
order to promote the broad adoption of the newest technology for the benefit of the economy.
The impact of IPR on the economic process in many nation depends on a number of different
2
The Geographical Indications of Goods (Registration and Protection) Act,1999 (No. 48 of 1999).
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stages of development, including GDP growth, the development of human capital, imitation
activities, technological advancement, etc. Generally speaking, high-income nations produce
the majority of innovations due to various R&D initiatives, and IPR protection further
promotes innovation by enabling it to generate substantial profits. Although material
possession rights have a favorable impact on the economy overall, this benefit is less
pronounced in middle-income countries than in high-income ones. This can be attributed to the
fact that IPR protection is extremely inadequate in these nations. Each middle-income country
has a unique economic framework and a variety of intellectual property rights. As a result,
there may be two types of middle-income nations: upper middle-income nations and lower
middle-income nations. It is said that IPR improve economic processes in higher middle-
income nations. However, because to inadequate property rights protection, IPRs only
moderately affect economic growth in lower middle-income nations. This effect becomes more
less in low-income nations. By encouraging innovation, creativity, and competitiveness,
intellectual property rights (IPR) significantly influence a country's economic development.
Through the legal protection of trademarks, creative works, and inventions, IPR allow people
and companies to invest in R&D without worrying about their ideas being copied. This
protection helps small and medium-sized businesses develop their brands, draws in
international investment, and promotes industrial progress. Furthermore, by bringing domestic
laws into line with international norms, a robust IPR framework improves trading possibilities
worldwide. In general, IPR is a major force behind the creation of a knowledge-based economy
and the advancement of sustainable economic growth.
Impact of Intellectual Property Rights Laws on India's economic landscape:
1. Fostering Innovation and Creativity – Exclusive rights over inventions are granted by IPR
laws to creators and inventors, providing legal protection that encourages Research
&Development. This protection fosters a culture of invention by guaranteeing that innovators
can benefit from their work without worrying about quick replication. Technological
developments and patent filings have increased in India as a result of the country's improved
IPR frameworks, especially in fields like biotechnology, information technology, and
pharmaceuticals. The creation of new goods and services as a result of this surge in invention
has improved living standards and stimulated economic growth.
2. Attracting Foreign Direct Investment (FDI) - One important factor influencing foreign
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investors' decision to invest in a nation is a strong intellectual property rights framework. India
is a desirable location for FDI3 because of its robust intellectual property rights, which reassure
investors that their products and innovations will be protected from unlawful usage. In addition
to supporting India's economic expansion, the foreign investment inflow has made it easier for
the country to transfer technology, develop its workforce, and integrate into international value
chains. This dynamic has been especially noticeable in the manufacturing and service sectors,
where international partnerships have facilitated the adoption of cutting-edge technologies and
industry best practices.
3. Improving Global Competitiveness - India's standing in the world market has improved as a
result of bringing its IPR laws into compliance with international standards. With the assurance
that their intellectual property is safeguarded, Indian companies have been able to grow
globally through adherence to accords such as the Trade-Related Aspects of Intellectual
Property Rights (TRIPS). Further integrating India into the global economy, this alignment has
also made it easier for the nation to engage in international trade and partnerships.
4. Innovation Promotion - By giving inventors the sole right to use their creations, intellectual
property rights (IPR) play a critical role in fostering innovation4 and attracting funding for
research and development. The Indian government has put in place a number of measures to
encourage entrepreneurs and fortify the intellectual property rights framework. At the Indian
Institute of Science (IISc) and other Indian Institutes of Technology (IITs), for example, the
Ministry of Electronics and Information Technology (MeitY) has set up Nano Electronics
Centers. Deep tech is advanced by these centers, which connect research to practical uses.
Additionally, to encourage Indian companies and entrepreneurs to create domestic tech
solutions and promote an independent digital ecosystem, the Aatmanirbhar Bharat App
Innovation Challenge was established.
5. Foreign Investment Attraction: A robust Intellectual Property Rights (IPR) regime is pivotal
in attracting Foreign Direct Investment (FDI)5 to India. Strong IPR protection assures foreign
3
Banga, Rashmi (2003): Impact of government policies and investment agreements on FDI inflows, Working
Paper, No. 116, Indian Council for Research on International Economic Relations (ICRIER), New Delhi
4
Chauhan, k. (2024). Intellectual Property Rights and Innovation: A Study of India's Legal Framework. Indian
Journal of Law, 2(3), 38-45.
5
Dr. Pradip Kumar Das, a study on intellectual property rights-indian context, Asian. Jour. Social. Scie.
Mgmt. Tech. 2024; 6(4): 185-196.
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investors that their innovations and proprietary technologies will be safeguarded against
unauthorized use, making India a more appealing destination for investment. Studies have
shown a positive correlation between enhanced IPR protection and increased FDI inflows,
particularly in technology-intensive sectors where the risk of imitation is high. In addition,
programs like the National IPR Policy and IP office modernization show India's dedication to
conforming to international norms, which promotes an atmosphere that is favorable to foreign
investment. It's important to understand that, even while robust IPR protection is important, in
order to maximize FDI attraction, it must be combined with other advantageous factors like
market size, economic stability, and open regulatory procedures.
6. Global Integration Market: India's entry into the international market has been greatly
facilitated by its ratification of the Trade-Related Aspects of Intellectual Property Rights
(TRIPS) Agreement. India has made trade ties easier and its involvement in international trade
has grown by bringing its intellectual property laws into line with international norms. Along
with increasing India's reputation among trading partners, this compliance has drawn foreign
investment, especially in knowledge-intensive industries. However, this integration comes with
difficulties, like striking a balance between public health demands and strict intellectual
property rights, as seen by discussions about access to reasonably priced medications.
Therefore, even while global market integration has made it possible for economies to thrive,
TRIPS compliance requires caution to guarantee that the advantages are shared fairly and do
not jeopardize fundamental public interests.
7. Access to essential effects - India has implemented specific provisions within its patent laws
to ensure public access to essential medicines while complying with international intellectual
property standards. Section 3(d) of the Indian Patents Act: This clause prevents the patenting
of new forms of known substances unless they demonstrate significant therapeutic efficacy.
The aim is to deter 'ever greening,' where minor modifications are made to extend patent life
without substantial benefit. This approach supports the availability of affordable generic
medicines by limiting unjustified patent extensions. Under specific circumstances, the
government may permit the manufacture of generic versions of copyrighted medications
without the patent holder's approval. This is known as compulsory licensing. The purpose of
this act is to enhance access to life-saving therapies and handle public health emergencies.
These legal frameworks demonstrate India's dedication to striking a balance between the
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demands of public health and intellectual property rights, guaranteeing that its citizens may
continue to obtain and buy necessary medications.
Positive impact of IPR laws on economy –
Laws pertaining to intellectual property rights (IPRs) are essential for stimulating economic
growth because they foster innovation, safeguard inventors, and boost industrial
competitiveness. Encouragement of research and development (R&D) is one of the most
important benefits of IPR regulations. Inventions, designs, and creative works are protected by
intellectual property rights (IPR) regulations, which guarantee that inventors can profit from
their labor. This protection encourages people and companies to invest in new technology,
which boosts economic growth and productivity. FDI is also drawn to countries with robust
intellectual property rights6. Businesses from other countries are more inclined to invest in
nations that protect their intellectual property. In addition to providing funds, this investment
influx also introduces cutting-edge managerial techniques, skills, and technologies that support
economic modernization. For instance, post-TRIPS revisions to India's patent rules have
increased investment in industries including software, biotechnology, and pharmaceuticals.
Additionally, IPR helps small and medium-sized businesses (SMEs) expand by giving them a
competitive edge and protecting their brand identity. Businesses can increase their market share
and profitability by differentiating their goods and services through the use of patents,
copyrights, and trademarks. Traditional knowledge has been conserved and rural economies
have been strengthened by Geographical Indications (GIs), such as those safeguarding
Kanchipuram silk and Darjeeling tea. In conclusion, properly drafted intellectual property
rights (IPR) regulations greatly contribute to sustainable economic growth by establishing an
atmosphere that encourages invention, draws in capital, encourages entrepreneurship, and
strengthens international trade.
Negative impact of IPR on economy –
IPR can sometimes have the drawback of limiting the simplest possible use of technology. The
owner of IPRs occasionally abuses their privilege. They will continue to charge as they see fit
because the innovation is protected by IPR, which prevents competitors from using it.
6
Chakraborti, A. (2001), “The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-
Country Regressions” Kyklos, 54 (1), pp. 89-113.
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Competition is the most significant element affecting an economy. Both the price and the
quality of the goods are kept in check by the spirit of competition.7
IPR regulations lead to market monopolies. Copyright, trademarks, and patents are examples
of IPR laws that make it difficult for competitors to use innovations. Competition forces
manufacturers to think about the customer's benefit and happiness because if the customer isn't
happy, they will move to another competitor in the market. Customers and the market may be
directly impacted by the manufacturers' ability to charge any price. The law of demand states
that if a value is high, there will be little demand. However, in a market with a monopoly, this
regulation is not applicable.
The buyer will have no other choice but to purchase the goods at the price set by the
manufacturer. The producer cannot charge instead of the monetary value because of
competition.
Landmark Case Laws:
1. Novartis AG v. Union of India (2013)8:
The Indian Supreme Court affirmed the denial of Novartis' patent application for the
beta crystalline form of imatinib mesylate (marketed as Gleevec) in this landmark
decision. Section 3(d) of the Indian Patents Act requires that the new form show
improved therapeutic efficacy over the recognized chemical, and the Court found that
it did not. This ruling ensured that patents are only awarded for true innovations,
strengthening India's position against "ever greening" activities. The pharmaceutical
industry's contribution to economic growth and public health have been significantly
impacted by this verdict, which has encouraged the provision of reasonably priced
generic medications.
2. Bayer Corporation v. Union of India (2014)9 –
India issued its first compulsory license in this case. Citing the prohibitively high cost
7
Dr. Pradip Kumar Das, A STUDY ON INTELLECTUAL PROPERTY RIGHTS-INDIAN CONTEXT,
Asian. Jour. Social. Scie. Mgmt. Tech. 2024; 6(4): 185-196.
8
Novartis AG v. Union of India, (2013) 6 S.C.C. 1 (India).
9
Bayer Corp. v. Union of India, 2014 (60) PTC 277 (Bom) (India).
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and restricted supply of Bayer's copyrighted cancer medication Nexavar, the Indian
Patent Office awarded Natco Pharma a license to manufacture a generic equivalent. The
ruling reaffirmed India's dedication to expanding access to necessary medications,
promoting a competitive pharmaceutical industry that supports economic growth, and
putting public health ahead of private interests.
3. Entertainment Network (India) Limited v. Super Cassette Industries Ltd.
(2008)10–
The Supreme Court ruled on the matter of copyright in the broadcasting industry,
emphasizing the need to strike a balance between the public interest and the rights of
copyright holders. The decision affected the media and entertainment industries by
defining the parameters of copyright enforcement, which has consequences for
economic growth by affecting the creation, distribution, and monetization of content.
4. F. Hoffmann-La Roche Ltd. v. Cipla Ltd. (2009)11-
In this case, the Delhi High Court rejected Roche's request for an injunction against
Cipla for allegedly violating its patent on the medication Erlotinib, which treats lung
cancer. The Court emphasized the need to strike a balance between access to life-saving
medications and patent rights by taking into account the public interest and the
affordability of medications. Through encouraging competition and accessibility, this
ruling has impacted economic growth by influencing the pharmaceutical industry's
attitude to pricing schemes and patent disputes.
5. Colgate-Palmolive Company v. The Controller General of Patents, Designs &
Trade Marks (2013)12 –
A mouthwash composition that contained extracts of Indian herbs was the subject of a
patent application by Colgate-Palmolive. The Traditional Knowledge Digital Library
(TKDL) contains previous traditional knowledge that the Indian Patent Office cited in
rejecting the application. Through the preservation of indigenous resources and
10
Entertainment Network (India) Ltd. v. Super Cassette Indus. Ltd., (2008) 13 S.C.C. 30 (India).
11
F. Hoffmann-La Roche Ltd. v. Cipla Ltd., (2009) 40 PTC 125 (Del) (India).
12
colgate-Palmolive Co. v. Controller Gen. of Patents, Designs & Trademarks, OA/7/2011/PT/DEL, Order No.
73/2014 (Intell. Prop. App. Bd. June 6, 2014) (India).
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knowledge systems that are essential to cultural heritage and possible commercial use,
this case demonstrated India's efforts to defend its traditional knowledge against bio
piracy.
Conclusion:
A key component of economic strategy nowadays is intellectual property rights (IPR),
particularly for developing nations like India that want to establish themselves as marketplaces
driven by innovation. The importance of intellectual property rights (IPR) is found in their
capacity to reward and safeguard creativity, creating an atmosphere that incentivizes people
and companies to invest in novel concepts, innovations, and goods. India's economy is
becoming more and more knowledge-based, and maintaining growth, drawing in investments,
and improving its competitiveness internationally all depend on having a strong intellectual
property rights framework. In general, the Indian economy has benefited from IPR. Stronger
patent regulations and adherence to global accords like TRIPS have enticed foreign
corporations to invest in India, especially in fields like biotechnology, information technology,
and pharmaceuticals.
Indian businesses have also profited from increasing exports, protecting their innovations, and
broadening their global presence. The importance of intellectual property in economic growth
has been further emphasized by initiatives such as the National IPR Policy and heightened
awareness among businesses. But there are certain drawbacks to the IPR regime as well. Public
health concerns have been raised by the sometimes restricted access to reasonably priced
medications caused by the strict enforcement of patent rights, particularly in the pharmaceutical
industry. The efficacy of IPR safeguards is further compromised by problems like
counterfeiting, piracy, and court system hold-ups. These shortcomings emphasize the necessity
of a well-rounded strategy that guarantees innovation is promoted without jeopardizing the
general welfare of the populace.
In conclusion, IPR is essential to India's economic development since it fosters innovation,
draws in foreign capital, and strengthens homegrown firms. Even while the benefits are
apparent in a number of areas, reforms, improved enforcement, and raised public awareness
are still needed to solve the issues. To guarantee that economic gains are widely distributed
while upholding India's commitment to innovation and growth, an inclusive and well-balanced
IPR system would be essential.
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