Sunil Jain: Does science and technology matter?

RATIONAL EXPECTATIONS

On the face of it, the answer's obvious""science and technology (S&T) provides the cutting edge in a globalising world. While there are studies, such as one from the OECD, which say that a 1 per cent hike in spending on R&D generates a 0.13 per cent hike in productivity growth, more practical proof is the fact that countries with a higher R&D level have a higher share of high-tech exports.

Close to a fourth of all manufacture exports in Japan and Finland, for instance, are high-tech and these countries spend over 3 per cent of their GDP on research each year. By contrast, India spends under 1 per cent of GDP on R&D and high-tech exports from India comprise just 5 per cent of total manufactured goods.

So you'd think any government would accord priority to S&T? Well, in India, things are going the other way around.

Till the NDA came to power, the S&T portfolio was handled by the Prime Minister himself/herself; this got downgraded to a Cabinet-ranked minister (Murli Manohar Joshi) under the NDA; and the UPA's relegated this to a minister of state rank level (Kapil Sibal)! Indeed, if things had gone according to plan, it would have been downgraded even further.

Since it wasn't certain that India and the US would be able to reach a nuclear agreement during Prime Minister Manmohan Singh's visit, a parallel project was kept ready, a high-profile S&T cooperation agreement which would facilitate joint work on areas like biotechnology and nanotechnology.

But once the PM signed the nuclear agreement, the powers that be felt there was no need to sign one on S&T, and so the S&T secretary, who was accompanying the PM, was asked to sign this one.

It was only when wiser counsel pointed out this would probably be the first time an agreement between two major countries was being signed by a bureaucrat that this was put on hold""indeed, at one point, when the secretary was reluctant to sign, our ambassador in the US is believed to have said he'd sign!

While it's possible to dismiss this as just a hang up with hierarchy, in the Cabinet system, there is little doubt that high-profile ministries get things done, the others don't.

The Met department, which has been found wanting on more than one occasion, doesn't have a head for nearly six months now, and Sibal doesn't have the clout to get the matters expedited""indeed, the Met department continues to operate with an outdated super computer with a 3 terraflop capacity as compared to the 2,500 or so that the European Union's Met uses. Even the Survey of India hasn't had a head for months!

The other problem that India's S&T sector faces is that, even 15 years after reforms began, R&D spending remains concentrated in the government's hands""of the $3 billion R&D in the country in 2000-01, just a fourth was from the private sector (the OECD study says the impact of R&D is greater when it's private and when the share of universities is higher than that of government labs, which is the reverse of the situation in India).

While this is obviously changing with each passing year (in 1990-91, just 6 per cent of total R&D was by the private sector), government policy still remains R&D-unfriendly.

Take pharmaceuticals, for instance, the area where the biggest R&D bucks are being spent today. Till the government introduced the new patents regime, even Indian pharma firms didn't want to invest in R&D since their work could be easily copied by others.

So, the introduction of the product patents regime was a big step forward and companies stepped up R&D. Yet, domestic pharma firms like Nicholas Piramal have only recently gone to Canada to do human trials for an anti-AIDS and anti-cancer drug instead of doing it here. Why? Well, the law doesn't provide for data exclusivity, which means that any data filed by a company on its product-trials can be given to a rival.

Indeed, MNC firms like Pfizer and Novartis have taken a policy decision that they will not bring in new drugs into the country till they are satisfied with the quality of laws. The clinical research and contract manufacturing business, by the way, is projected at over $100 billion in the next decade, and India cannot get a significant part of this without data exclusivity laws""China's already agreed to data exclusivity of six years.

It doesn't help, either, that the government continues to keep control of everything. While minister Paswan wants to now bring more drugs under price control (earlier he wanted to fix the marketing margin on each!), from the existing 76 to 354, the new patent regime, which allows Indian companies to continue to produce drugs which were patented between 1995 and 2005, says "the patent holder shall only be entitled to receive reasonable royalty ..." Who decides what reasonable is?

The government, that's who! With such laws, it's foolish to expect any huge R&D surge in the country, and hence any giant leap in productivity.