In September 2015, when Prime Minister Narendra Modi visited Silicon Valley, a bunch of entrepreneurs were invited for a dialogue. Orchestrated by the Confederation of Indian Industries, the elite group was called to discuss what would make India tick for innovators. To the disappointment of many, the crowd was not large enough. Hence, the prime minister ended up spending less than the stipulated time. When he arrived, he said, “Every successful person I ask, they say they went to Singapore, London, Switzerland…Nobody stays in India. If you all can give one suggestion—do this and I am not going to leave India—I’ll make it happen. Make only one wish. If you make two, you’ll be disqualified.”

Soon after the monologue, the 20-plus entrepreneurs present there were given an email id. They were asked to send their ‘one thing’ that needed to change for the innovators to stay put in India, recalls an entrepreneur who was present there but doesn’t want to be identified.

Effective 1 April, one of those wishes have come true. India has adopted a concessional rate of corporate tax for income earned out of a patent registered and developed in India. The reduced rate, of 10% (plus applicable surcharge and cess) is meant to encourage companies to build intellectual property (IP)-based businesses out of India. Such a tax provision was first started by the United Kingdom as the “Patent Box”, but many countries have since followed suit making them sought after destinations for IP-based business deals.

Other than the tax consultants, few in India know about it. But this must be called out as a template for fixing what is broken in the Indian innovation infrastructure. Seek, consult, act and implement; all in a matter of 18 months.

“It’s a very clean tax law. Since it is based on self-assertion, you are not dependent on anybody to approve or deny you the benefit. You don’t even require an auditor certification,” says Vishal Gada, a partner at the law firm Dhruva Advisors in Ahmedabad.

Beyond the Box

Tax is an integral part of what IP-driven companies do. License or sell their IP, use that one-time payment, royalty or milestone earning to do further Research and Development (R&D) and innovate. But when 30-35% of that earning goes in tax, it hits where it hurts the most. Because you can always write your past losses into it, but not your future losses. In the commercially fallow period when fresh IP is being built, there’s no income. And few investors like to bankroll it.

“This isn’t innovation friendly,” says an entrepreneur who set up an office in the UK after its Patent Box came into effect in April 2013. He declined to be named.

Unarguably, India’s own Patent Box coming into force in the current financial year is a significant development.

AUTHOR

Seema Singh

Seema has over two decades of experience in journalism. Before starting The Ken, Seema wrote “Myth Breaker: Kiran Mazumdar-Shaw and the Story of Indian Biotech”, published by HarperCollins in May 2016. Prior to that, she was a senior editor and bureau chief for Bangalore with Forbes India, and before that she wrote for Mint. Seema has written for numerous international publications like IEEE-Spectrum, New Scientist, Cell and Newsweek. Seema is a Knight Science Journalism Fellow from the Massachusetts Institute of Technology and a MacArthur Foundation Research Grantee.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.