R&D units may get shares in exchange for IPRs

new delhi: the government is looking into setting up a formal mechanism that would enable r&d institutions to accept at least a part of their licensing fee as equity shares of the company which licenses their know-how or technology. ‘’one instrument for better utilisation and wealth creation from the research output of government r&d organisations and universities could be the exchange of their ipr for the equity of the companies which are willing to license or buy their iprs and for joint r&d projects,’’ says a task force report on chemicals released in february. technological obsolescence is one of the major reasons for the non-competitiveness of the indian chemical industry. many cutting edge technologies are either not available for licensing (like agrochemicals, fuel cell catalysts, membranes) or are very expensive says the report. the task force, headed by ici india chairman a s ganguly, had representatives from both the government and industry. most of the chemical industries in india are too small (by world standards) and lack the financial resources to mount major r&d programs. however the facilities, know-how and technology created with government funds in r&d organisations like csir, icar, icmr and universities are not being utilised fully. several technologies thus developed also have short life (typically five years). says csir director general r a mashelkar :‘’the promise was made some years back by then finance minister p chidambaram. however, there is no clear-cut framework with transparent rules. r&d labs and universities are not equipped to handle issues like valuation and exit. so there is an urgent need for the government to act.’’ according to him, there have been some isolated instances of exchange of ipr for equity, but a policy directive is likely to give momentum. the report says indian industries are unable to pay fees and lumpsum amounts upfront, for such intellectual property. suggesting the exchange of ipr for equity as a way out, the report says the amount of equity may be broadly equivalent to the cost of development plus the discounted value of the estimated benefits. seen from the r&d organisations’ point of view, such a policy change would be an incentive to convert their know-how while it still has some market value into much-needed additional funds for research. it would also reduce their current overwhelming dependence on government for funds and open additional sources of revenue. it would also increase the industrial job opportunities for students (in the case of universities).