SSIs can -- and should -- be innovators
R.Gopalakrishnan
The term "intellectual property" has been in the air for the past few years for the wrong reasons -- in an endeavour to preserve as a substitute for innovation the right to copying and re-engineering. That was a negative signal, especially to the small scale sector industry (SSI) sector, because among the advantages that small businesses possess inherently are the capacity to innovate and the flexibility and ease of decision-making in committing resources for innovation.
The attitude of organised industry in India that prevailed before 1991, the year of economic reform, has often been described as "export pessimism", viz, anxiety to protect the domestic market and lack of confidence to win export markets. Even during those decades, it was the small industry sector that contributed substantially to exports.
Hence it is reasonable to assume that in the present domestic and international economic scenario, the environment is favourable to those who believe in innovation -- either by themselves undertaking to invent new products and processes or by committing resources to commercialisation of innovations done by others, of course with uncertainty of success. But success, when it comes, as venture capitalists will vouchsafe, will more than offset losses on failed projects. It will also give a head start to the manufacturer in the product line concerned, to be taken advantage of through incremental improvement innovations before others take to such improvements on the pioneering invention.
Most of commercialised innovations in the world are not path-breaking ones but improvements on some invention or the other to add value to the user or to cut costs and improve quality. Patents and industrial designs registration, properly called industrial property rights (and forming part of intellectual property rights or IPRs) are the vehicles which a modern State is supposed to use to encourage innovation to the benefit of society. The historically progressive role played by the IPR system in the epoch of the market economy lies in the fact that they put before the public domain and throw open to society, in return for a limited monopoly to the inventor, ideas and knowledge that in earlier epochs would have remained the private property of individuals, families and castes and practically inaccessible to others.
Ingenuity shown by a section of the SSI sector so far helped them to reengineer technologies and techniques developed outside the country or by big firms within the country. In many cases, enterprising SSIs have taken to the unethical practice of exploiting reputed brands by misusing them on their own products. In the pre-reform era, big companies were indifferent to loss of market share arising from such piracy since they could operate on the basis of cost-plus profit. Now the situation has changed. Big companies, both Indian and foreign, are employing their own resources as also those of law-enforcing agencies to clamp down on piracy.
This should provide a spur to innovation by small and medium enterprises (SMEs). It is in the nature of inventions that ingenuity of ideas and their practical utility are more relevant than their dramatic or breakthrough nature or costs of developing them. Thus SMEs have no reason to shun development/commercialisation of innovations, leaving this crucial activity to big companies. The thousands upon thousands of products that flood the market every year are results of innovation, be it the safety pin, stapling machine, zipper, coat hanger, pressure cooker or vending machine, not to mention computers, electronic gadgets and aerospace vehicles.
The rewards and funds given to small businesses specifically for promotion of innovation in India are no match for corresponding programmes operated by governments in the US, Britain and other developed countries. SSIs and medium enterprises should not only use them to the utmost extent but also suggest sensible improvements to the IPR protection system based on their experience in innovation. It is a task that piracy-driven "enterprise" will not be able to accomplish.
SSIs : A review
