The Indian government is actively working on developing a framework for valuing intellectual property (IP) as part of its efforts to facilitate financing through innovative financial instruments. The Department for Promotion of Industry and Internal Trade (DPIIT) is spearheading this initiative, primarily to support micro, small and medium enterprises (MSMEs) and startups that possess valuable IP assets and are seeking alternative avenues for raising capital.
IP financing involves leveraging intellectual property rights to access financial benefits,IP credit and revenue generation. It can also serve as collateral in various business transactions. To create an effective IP valuation system – the DPIIT is planning to study IP financing models implemented in countries such as Singapore, the UK, South Korea, Malaysia, Japan, Thailand and Canada.
The anticipated benefits of IP financing include strengthening India’s financial landscape, fostering financial innovation, making credit more accessible and enhancing capital availability. This approach aligns with the National Intellectual Property Rights (IPR) Policy, which aims to enable the valuation of IP rights as intangible assets through appropriate methodologies and guidelines ; thus facilitating their use as collateral and securitization.
In addition the DPIIT intends to explore the creation of new financial instruments, derivative contracts, corporate securities and pooled investment products that can be claimed as IP rights. These innovations are expected to become alternative economic and financial tools.
Currently IP financing in India is in its early stages, necessitating the protection and regulation of intangible assets. To support these efforts the department plans to engage a consultant to gather data related to IP application and registration, utilization, and the volume of IP financing in the country. They will also assess the challenges, legal frameworks, government policies supporting IP financing and the accounting standards required for IP valuation.
In summary, India is actively working on IP valuation rules to boost funding opportunities for businesses articularly startups and MSMEs, by harnessing the value of intellectual property as an intangible asset in various financial instruments. This initiative aligns with the country’s commitment to promoting and protecting intellectual property rights.