Many among India's vast pool of highly trained academics are underemployed. At the personal level, individuals who have received graduate training often hold jobs for which they are vastly overqualified, if they are working at all. On a macroscale, India could harness its scientists to generate much-needed wealth. But instead, the investment that has gone into their education is sadly squandered.
"Last year, the U.S. Department of Education found the Indian Institute of Science (IIS) to be the 18th strongest [research] institute worldwide--with chemistry leading," says S. S. Krishnamurthy, who heads the Chemical Sciences Division at IIS. Located in pleasantly cool Bangalore, IIS was founded in 1909 through a generous gift of Jamsetji Nusserwanji Tata, founder of Tata , India's largest business group.
Arguably India's premier scientific research institution, IIS retains from the Tata group an abundant amount of real estate properties and stocks in Tata companies. The institute offers only graduate education programs. Its professors say that IIS gets India's brightest students--those that don't go abroad to study, that is. Yet despite the caliber of education it offers, many of its graduates cannot find meaningful employment in India. "Half of our graduates go abroad [to work]. The others work here, some in national labs," Krishnamurthy says.
The quality of researchers available for hire in India and the low salaries they command by international standards are compelling arguments for multinational firms to conduct research in India. "In the U.S., it costs perhaps $5,000 to $10,000 per month to employ a researcher," says chemical engineering professor V. M. H. Govindarao at IIS. But when translated into rupees, "this is an enormous sum," he notes.
Local firms barely take advantage of the country's vast intellectual capital. One reason for the low level of interest is that Indian chemical companies are either too small or too young to set up an R&D establishment. R&D can turn into a costly investment that does not pay off. So in the past, chemical companies have limited themselves to sponsoring research providing relatively minor process improvements. "Successful interaction between academics and industry has been limited to academics with a flair for troubleshooting and optimization," says IIS chemical engineering professor K. S. Gandhi.
Others are more harsh when commenting on Indian companies. Says chemical engineering assistant professor Madras Giridhar: "Typically, business thinks short term. They just license [technology] from the U.S., and after some time, they re-license."
Second only to Japan within Asia, India's pesticide industry is fairly large by world standards. But most of the companies are small--about 500 companies are formulating pesticides in the country. S. C. Mathur, executive director of the Pesticides Association of India in New Delhi, commends India's network of national labs for enabling the country's pesticide industry to achieve its current size. But he notes that Indian researchers have developed only new production processes. As for the development of new molecules, he stated in a paper published earlier this year: "This area of research calls for massive investments and costs, and the Indian industry, due to its small size, is not geared toward this end."
Until recently, the bureaucracy of the New Delhi-based License Raj, now abandoned, led companies to attach little value to R&D compared with the benefits that could be reaped by obtaining a license to build a plant. "These licensing laws are partly responsible for the lack of R&D enlightenment," says V. Kumaran, assistant professor of chemical engineering at IIS. He believes that the pernicious influence remains: "[Some] multinational companies understand India's R&D cost advantage, but Indian companies are frozen in this [licensing] mind frame," adds the Cornell University graduate.
So far, foreign companies, like Indian firms, have not conducted much research in India. One reason is that only in this decade have they started to resume interest in India. At this point, only a handful have the local organization in place from which they could direct an R&D effort.
Moreover, many foreign companies lack a long-term perspective on India. Says Kumaran, "Every two months or so, we get delegations from multinational companies. They usually ask: 'Do you have any idea what will make us money?' It doesn't work that way. We don't know what will make them money. We expect that they will invest for two or three years in the project and see what comes out of it. [But] they want immediate benefits."
Starting up an Indian research program is costly. To seed the effort, a foreign company must dispatch researchers from its central labs to India. Given that India is considered a "hardship" posting for Americans and Europeans, it costs up to $1 million per year per expatriate researcher to start up an Indian corporate R&D lab. And these research managers have to stay in place until local staff are clear about the company's goals. Until then, paying salaries for the expatriate staff can obviate the benefits derived from hiring Indian researchers cheaply. That is why most foreign multinationals prefer to wait until their sales and profits in India have reached a "critical mass."
Other than the cost of expatriate researchers, a further disincentive to conducting research in India is the weak protection given to intellectual property. India offers protection, but it doesn't meet international standards. The Indian Patent Law Act of 1970 has eliminated product patent protection, retaining only process patents.
In a paper presented in May at the Outsource USA '98 conference in San Francisco, Mukund S. Chorghade, director of chemical process R&D at Cytomed in Cambridge, Mass., and Veena M. Chorghade, vice president of business development at CP Consulting in Wellesley, Mass., explained the current state of patent protection. They said: "[First,] any patent obtained prior to July 1995 in any World Trade Organization (WTO) country will not be valid in India; only process patents will be honored. The patents will be covered by existing Indian patent laws for manufacturing and marketing. [Second], drug patents filed after July 1, 1995, will not be available to Indian companies to manufacture or sell without license from the inventor, even if they are imported. . . . [Third], for a molecule patented after July 1, 1995, if approved for marketing prior to January 2005 in any WTO country, a five-year exclusivity period (or until an Indian patent is granted or denied, whichever is shorter) will be granted to the marketing company in India. The product will still have to be approved for its safety and efficacy in India."
The Chorghades also explained the rationale behind Indian resistance to having a more standard patenting system. Indian thinking regarding patent protection has been shaped by a statement by the late Prime Minister Indira Gandhi: "There should be no patenting of life and death."
The Chorghades also noted that "Indian violations of product patents have habitually led to denunciations of 'intellectual piracy' by the developed nations. Care, however, must be exercised in levying such charges, as they could lead to retaliatory charges of 'biopiracy' against Western pharmaceutical companies. Indian sensitivities have been aroused to the continued patenting of traditional Indian herbal remedies, natural products obtained from indigenous flora and fauna, and even the culinary delights of India by Western companies."
Fortunately, some encouraging signs indicate that India will tighten up its patent protection regime. That's because there are compelling reasons to do so. For instance, the Chorghades pointed out that some Indian companies have begun to file international patents for their drug discoveries.
Moreover, the Council of Scientific & Industrial Research (CSIR)--which is a 10,000-researcher strong, government-sponsored network of labs--has a new strategy. By 2001, CSIR hopes to provide a "global R&D platform, providing competitive R&D and high-quality, science-based technical services." Its labs have discovered 14 new drugs in recent years, the Chorghades said, many of which were derived from Indian natural products.
Indian universities and some local companies also hope for stronger patent laws. According to IIS professor Gandhi, with liberalization and the growing need to compete globally, Indian companies have begun to realize the edge that uniquely differentiated products could provide them in world markets. His colleague, professor Govindarao, observes: "Just now, thanks to globalization, industry realizes that it has to offer competitive products." Assistant professor Kumaran is also optimistic about the changes under way in India: "In the future, Indian companies will need to take a longer term view. [India] is becoming a free market. Profitability will depend on the ability to develop new processes. Change will take place. Some companies will go bankrupt, while some will innovate."
So far, most of the chemical research agreements between universities and companies have taken place in Mumbai because that is where most chemical companies are headquartered. The Department of Chemical Technology of the University of Bombay is reputed to be most active in collaborating with the chemical industry. But other universities in India are feeling increasingly motivated to get "a piece of the action."
One reason is that government funding of universities has followed a downward trend in recent years. Gandhi says that 90% of the department of chemical engineering's budget goes toward paying salaries. To improve their financial condition, the universities need to collaborate with companies. It's difficult to imagine that universities will not support a strengthened patent regime in order to attract more corporate funding. "We are actively looking for partners," Gandhi says. "It's a big transition now. . . . There is an enthusiastic attitude of faculty members toward collaborating with industry."
The international scientific community's linkage with India has improved in recent years, thanks to the Internet in particular. But as is the case with the development of industry in general, the future of R&D in India, and particularly the cooperation between universities and corporations, depends to a large extent on government policies.
Recent developments in that regard have not helped. The nuclear tests conducted in May have reduced the level of cooperation between researchers in the U.S. and India (C&EN, June 22, page 6). Furthermore, the decision in early June to raise India's import tariffs across the board by 4% will reduce in time the incentive for industry to develop more differentiated products. Both moves also decrease the attractiveness of India to multinational corporations, and therefore the likelihood that they would invest in research in India.
