The much anticipated financial budget of 2016 was presented before the houses of the Parliament on February 29th, 2016. While the budget is being looked at as a good budget overall; the realm of Intellectual Property has found a few reasons to cheer. Mr. Jaitley, Finance Minister of the GoI has observed that “Research is a driver of innovation and innovation provides a thrust to economic growth”. In this light the Minister has proposed a special patent regime with 10 per cent tax on income from worldwide exploitation of patents developed and registered in India. This is the only IP related provision that the budget directly talks of.
However, an opportunity can be seen in the fact that Start-ups and MSMEs have emerged as the big winners in the budget. The government noted that startups generate employment, bringing innovation and are expected to be key partners in Make in India programming. Therefore, startups will be assisted in their propagation through 100 per cent deduction of profits for three out of the five years for startups set up during April 2016 to March 2019.
The Revised National Draft IPR policy is speculated to be released later in either March or April this year. If the draft can be read in conjunction with the budget and the recently announced Scheme for Facilitating Start-UPs Intellectual Property Protection (SIPP), it could appear that Intellectual Property this year might see an unprecedented growth.
The budget seeks to incentivize companies that are thinking ahead of the curve on capturing intellectual property and investing in high end technology especially the MSME. The budget creates a slightly favorable tax regime for IPR to enable startups to establish their base. However, suggestions that intellectual property rights (IPR) creation, be treated at par with capital expenditure (Capex) in manufacturing from a taxation perspective has not been materialized by the budget.
While the budget by itself cannot be treated as the game changer this year (for IP), the Draft IPR Policy, the Draft Patent Rules, the guidelines for examination of CRIs (Computer related inventions) and the Start-UPs Intellectual Property Protection (SIPP) scheme read in conjunction with the budget 2016 might turn out to be one for IP in India.
Authored by Gaurav Mishra.