“National (Industrial) Policies and Programs to

Support Linkages and Partnerships Among R &

D Institutions (Governments), Academia and

SMEs in Nepal"

Rishi Raj Koirala

- B.E. (Mechanical), Panjab Univ., India

- M.S. (Environmental Management & Dev.),

ANU, Australia

Director, DOI July 17-18, 2012

Presentation on

Contents

1. National Policies

2. Key Legislations

3. Key Organisations

4. Initiatives of MOI

• Technology Development Fund Guidelines

• Business Incubation Centre

5. Conclusions

1. Framework Policies

Constitution and Plan documents

National science and Technology Policy, 1989 (with

revision in 2005)

Industrial Policy, 2010

Foreign Investment and One Window Policy, 1992

National Policy on Technical Education and

Vocational Education, 1999

Information Technology Policy, 2000

Telecommunication Policy 2004

Constitution & Plan Documents

• Interim Constitution of Nepal 2063 (BS), vide (Article 35.11), has categorically stressed the need for the development of science and technology, promoting the indigenous technology and enhancing the domestic technological capability.

• The Three-Year Plan (2067-68 to 2069/70), vide Section 6.8, have stipulated the following key strategies in S&T sector. – To put more emphasis on R & D activities. – To develop the science and technology through public-private

partnerships (PPP). – To avail the developed technologies for the income and

employment generation. – To provide incentives to attract investment in high-tech

industries.

• Industrial Policy, 2010 – Envisages to enhance the role of the industrial sector in the

national economy thereby contributing to poverty alleviation.

– The key policy objectives and strategies, primarily related to technology development and transfer, are the followings: • To make the industrial sector sustainable and reliable, the emphasis is laid

on the use of new and environment friendly technologies in the production.

• To support the R & D activities in new and emerging areas such as Information and Communication Technology (ICT), Biotechnology and so on.

• To extend the technical and financial support to the industries that adopt environment friendly and energy saving technologies.

• To extend special support to those industries that minimises pollution and endeavour to emit ‘zero carbon’ or tread in the path of ‘green economy’.

• To promote the industries, objective specific funds, such as Technology Development Fund’ will be created in collaboration with the private and cooperative sector.

• To promote the acquisition, adoption and innovation of the technologies, many incentives and support will be provided to industries, some of which are as follows:

– Industries that incur costs while adopting the new technologies shall be permitted to deduct the same from their taxable income.

– Machineries and Equipment imported for the R&D will not attract custom duty in excess of 1%. No VAT or excise will be applicable to them as well.

– Industries using the inventions made in Nepalese territory will be provided special incentives and concessions by the GON on the recommendation of the Industrial Promotion Board.

– Industries availing technologies based on Patents which are registered or approved by the GON will also be provided with special incentives and concessions by the GON on the recommendation of the Industrial Promotion Board.

– Business Incubation Centres (BIC) shall be established primarily to promote industries that are based on agriculture and non-timber based forest resources.

– Provision shall be made to ensure the access of Funds (such as Angel Fund and Venture Capital Fund) to the Graduates of BICs to establish and run the industries.

– Product Development Centres shall be established in different parts of the country in collaboration with the business associations.

• Foreign Investment and One Window Policy, 1992

– Adopted the liberal and open policy with the prime objectives of importing capital, modern technology, management and technical skills. This would increase productivity and develop industrial culture in the private sector thereby assure access to international markets.

Recognises the following forms of investments as the foreign investment: – Equity investment in the form of form of currency or capital assets and

reinvestment from income generated therein – Loans obtained in the form of foreign currency or capital assets Furthermore, it defines the 'technology transfer' as the followings:

– Use of any technological right, specialization, formula, process, patent or technical know-how of foreign origin

– Use of any trademark of foreign ownership – Acquiring any foreign technical, consultancy, management and

marketing services.

2. Key Legislations (Industry Related)

• Industrial Enterprise Act, 1992. industries can enjoy following incentives and concessions related to technology import, environmental preservation, efficiency improvement and skill development. – The capital goods can be imported at reduced tariff rate and no VAT/ST will be

levied on them. However, no tax, fee or charge of any kind shall be levied on the machine, tool and equipment.

– Pre-operating expenses incurred in connection with skill development and training is allowed to be capitalised.

– Up to 50 per cent of the investment made on process or equipment with the objective of controlling the pollution or minimising the adverse effect on the environment can be deducted from the taxable income.

– Up to 10 per cent of the gross profit shall be allowed as a deduction against taxable income on account of expenses related with technology, product development and efficiency improvement.

– Government may grant additional facilities to any industry established in Nepal by the way of invention therein.

Foreign Investment and Technology Transfer Act, 1992

• Probably, only law that governs technology transfer process in the country (from foreign countries).

• The definition of 'Foreign Investor' encompasses both the investor as well as those involved in the technology transfer.

• Technology transfer is possible in cottage industries, although investment is not allowed in such industries.

• It provides the following additional incentives – All forms of foreign investment (equity, loan, dividends, interest and other

earnings thereof) can be repatriated in foreign currency.

– Earnings made in lieu of technology transfer can be repatriated in foreign currency, as per the Agreement held between the concerned parties.

– Depending upon the situation, foreign investors and their dependents or representatives (potential or actual investor) are eligible for residential, business, and non-tourist visa.

Patent, Design & Trademark Act, 2013 (BS)

• Covers Industrial Properties (Patent, Design & Trademark)

• Extends protections – Patents, up to 21 years (7+7+7); normal practice is 20 years elsewhere

– Design, up to 15 (5+5+5)

– Trademarks, infinite (7+7+)

• DOI administers the Act

Ongoing Activities & that in pipeline: – IP policy formulation and subsequently revision of existing Act

– WIPO support for establishment of national IP Policy

– Ground work going on for accession to Patent Cooperation Treaty & Madrid Protocol

– DCSI provides financial support to the needy to prepare patent documents

– Patent access facility from the Universities and academic institutions.

– IP awareness program going on for quite some time

3. Key Organisations

1. Ministry of Environment, Science & Technology, Nepal

Academy of Science and Technology, Universities and

Research Centres under them (e.g RECAST), Information

Technology Park, Balaju Yantrashala Pvt. Ltd.

2. Government Research Centres (National Herbarium and

Botanical Laboratory, Forestry Research Centre, Royal Drugs

Laboratories, Central Food Research Laboratory, Nepal

Agricultural Research Council (NARC).

3. Ministry of Industry

DOI (technology transfer agreements, incentives to

industries, patents and designs registration)

DCSI (Skill training, Incubation Center)

CSIDB, IEDI (Business development and skill training)

NBSM (technical support)

4. Initiatives of MOI

1. Industrial & Foreign Investment Policy:

• Number of incentive initiatives to attract foreign investment and

facilitate the process of technology transfer.

• Liberal Economic Policy & emphasis on private sector led growth

2. Initiatives that support linkages and partnerships among

R & D Institutions, Academia and SMEs

Technology Development Fund

TDF Guideline in the final stage

Business Incubation Centre

In operation for last 5 years.

Salient Features of Proposed TDF

• Broader objective of the TDF : – “Development and commercial application of

indigenous/local technology, or adapting imported technology to wider domestic applications”.

• Application of Fund – The Fund intends to ensure technology transfer by extending

support and promoting co-operation between researchers/scientists/academia and entrepreneurs so as to ensure efficient introduction of research results of state research institutions into production.

– This may entail, among others, providing requisite financial support, extending awards/rewards to the researchers, creation of institutions such as “technology transfer office (TTO)” and so on.

TTOs

It is expected that TTOs will accomplish the following main tasks: • Map the opportunities of the respective universities and research

institutes to provide research and product development services meeting the needs of entrepreneurs;

• identify demand by companies for research results and co-operation opportunities;

• promote co-operation of entrepreneurs and scientists in order to attract financing of the private sector for research activity;

• ensure patenting of intellectual property created as a result of publicly financed research, ensure its protection and promote its application in the national economy;

• encourage establishment of new high technology companies on the basis of results of research conducted by domestic scientists.

• The Fund will support the researchers, academia and industries by providing a forum for appropriate networking, information gathering and sharing experiences and encourage stakeholder dialogues.

• Fund will support the domestic inventors, depending upon its potential impacts on economic development and enhancing competitiveness and export potential, in obtaining the domestic patent including their international registrations.

• Fund will support to encourage the acquisition of technological knowledge that are available in public domain, such as patents, and translating the same into industrial application in the country.

• Fund will encourage the inventions and innovations at national/regional/local level by granting the appropriate awards.

• The followings are identified as the potential sources for TDF. – Seed money provided by the GON. In the FY 2068/69, GON has

allocated Rs. 5 million towards TDF and this is likely to be continued in future too.

– Contribution from domestic industries, business community, NGOs and INGOs operating within the country

– Contribution from bilateral donors, or development partners, and multilateral institutions

• MOI will be the organisation responsible for the implementation, monitoring and control of the Fund. For this purpose, there shall be two-tier committees, whose formation shall be as under: – Steering Committee will comprise the following 11 members

representing relevant ministries, R&D institutions, universities and private sector/industries.

– Operation Committee will comprise the following 5-7 members:

Access to Fund • Fund will co-finance projects in small and medium

enterprises (industry and manufacturing), agro processing and renewable energy. – Major emphasis will be placed on projects, which have a great

potential for replication and for local adaptation at reasonable costs.

• Concessional Loans and Grants:

– The Fund is intended to provide, in initial phase, as Grants.

– Subsequently, the Fund will also provide loans on concessional rates to enterprises /agencies and make equity-investments. The intermediary agency, such as Banks, may be appointed to administer the fund.

– Grants will also be provided for arranging inter-industry trainings, in line with Fund objectives.

– Such loan or grants may be disbursed in instalments.

• The following agencies, who intend to commercialise the domestic R & D and research findings, are eligible to apply for the TDF:

– Universities/Colleges of Applied Sciences and Public R & D

Institutions that intend to set up TTOs.

– Enterprises. The enterprise should apply, along with an agreement signed by the R&D institution/research agencies/consulting firms willing to transfer the technology. Enterprises designing and developing engineering machinery are encouraged to apply.

– Legal title holder of the Domestically Generated Patent

– Nepalese scholars/researchers associated with the foreign universities or R&D institutions and are willing to apply their innovative knowledge or skills acquired there to set up an industry in Nepal.

• If the activity is for adapting and commercialising imported technology, TDF may be provided to the agencies listed above, if they are engaged in the following activities:

– effecting crucial modifications for wider domestic applications through an ‘R&D institution’ or through an individual and/or,

– further development of commercialisable technology imported when that technology is at ‘proof-of-concept’ or design stage.

• Apart from the Universities/Colleges of Applied Sciences and Public R & D Institutions that intend to set up TTOs, the specified categories of projects, as proposed by the Enterprises or Patent Title Holder or Nepalese researchers abroad, will be funded from the TDF.

• BIP came into operation from fiscal year 2063/64 (about 5 years ago).

• BIP is currently working with five Incubatees after graduation of eleven successful incubatees.

• Full furnished in-house capacity for five Incubatees and service capacity for 15-20 virtual Incubatees parallel.

• The BIP Board is constituted with chairmanship of Director General of DCSI and Board Members from FNCCI, MoEST, NAST, KU, ITPF and member Secretary of Board as Director of DCSI.

Business Incubation Centre: DCSI

Business Incubation Network of stakeholders

Stakeholders Domain

Business Development Stages R&D and Idea Development

Demonstration and

Development

Micro Enterprise

Development

Scale Up and Growth

Commercial

R & D Institutes

Universities and Students & Professional Communities

NAST – NARC – ICIMOD – CIT – CARD - OTRC

Technical Expertise – Lab Facilities – Knowledge

Generate IP: Limited commercial technology transfer and R&D budgets

Institutions Capacity / Strength Gap / Shortcomings

TU – KU – Pok U – Pur U

SOIES-Nepal, Locus-ITPF – CAN – NEA

Student Projects – Exhibition - Innovation – Lab – Knowledgebase – Technocrats

Entrepreneurship – Innovation commercialization

Technical , management & vocational institutions

Students & professional Association

Future Strategies

• Private management of BIP with operational and functional autonomy.

• Create pool of experts for research, development and testing

• Networks with different clients groups and suppliers for establishment of BI in their institutes

• Expand to other parts of the country

• Provide incentives to the private sector in establishing such centres

Conclusions There is a need for formulating the appropriate science and

technology policies to enhance the domestic technology capacity to

promote the innovation. This should include, inter-alia, measures to

support linkages and partnerships among R & D institutions,

academia and SMEs in Nepal.

Such policy should be part of ‘industrial development policy’

Formulation of sound policy is to be followed up with clear strategies

and implemented with due vigour to ensure linkages and partnerships

amongst the enterprises, R&D institutions and Transfer of

Technology. This, in the long run, can contribute to the economic

growth and prosperity.

Thank You