Panel suggests ways to boost investment in R&D activities

NEW DELHI: To boost private sector investment in research and development (R&D) activities, a government panel has suggested a slew of measures including provisions for Micro, Small & Medium Enterprises (MSMEs) to make intellectual property as an asset for raising funds.

The suggestions have come three days after Prime Minister Manmohan Singh rued the "lack of enough private sector participation in scientific research and development activities."

Singh had said that it was holding back India from becoming a scientific powerhouse.

The panel has also suggested tax benefits on private sector investments made for procuring Intellectual Property Right (IPR) and make it mandatory for private entities to separately list R&D expenses in their balance sheets.

Seeking to encourage MSME to invest more in R&D, the expert group said "a special credit guarantee scheme may be provided by the government to banks and financial intuitions to consider IP as a mortgage-able asset."

The suggestions were part of a white paper prepared by a joint committee of industry and government, which was released by the Ministry of Science and Technology here on Friday.

The report assumes significance in the light of the fact that private sector investment in the country is about 25-30 per cent in comparison to about 70 per cent investment coming from the government side.

Releasing the white paper, S&T Minister S Jaipal Reddy said higher private sector investment yields good "rate of return" while department secretary T Ramasami said the "desire" is to see investment in the level of 50:50.

The panel has also mooted the idea of providing relaxations to eligible MSMEs with regard to public procurement.

The government may relax past track records for MSMEs when the products are developed indigenously or when they commercialise technology developed through public funded institutions, it said.

The white paper said that all investments made in procurement of IPR through a formal mechanism of private sector companies from public funded institutions in the country or abroad could be considered for tax benefits.

"In order to cover the risk failures of IP in commercialisation, provide two-year income tax holiday on the sales proceeds of products and services emanating from new IPRs," it added.