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TRAINING PROGRAMME ON TECHNOLOGY DIPLOMACY

TRAINING PROGRAMME ON TECHNOLOGY DIPLOMACY. JAIPUR 11 – 15 July 2011. TECHNOLOGY SOURCING AND ASSESSMENT. BY Dr. Vinay Kumar Former Advisor/Scientist G, Ministry of Science and Technology 12 July 2011. MAJOR ISSUES CONCERNING INDUSTRY. Shorter life cycles of technology

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TRAINING PROGRAMME ON TECHNOLOGY DIPLOMACY

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  1. TRAINING PROGRAMME ON TECHNOLOGY DIPLOMACY JAIPUR 11 – 15 July 2011

  2. TECHNOLOGY SOURCING AND ASSESSMENT BY Dr. Vinay Kumar Former Advisor/Scientist G, Ministry of Science and Technology 12 July 2011

  3. MAJOR ISSUES CONCERNING INDUSTRY • Shorter life cycles of technology • Intense national and international competition • Global markets • Quality, cost, delivery, after-sales service, international standards • Intellectual property rights • High risks in investment

  4. MAJOR ISSUES CONCERNING INDUSTRY (Contd.) • Shorter time between innovation and commercialization • Research and development important • Energy efficient technologies • Environment friendly technologies • Information and communication networks • Socio-economic and socio-political factors • Movement of capital across national boundaries

  5. SCIENCE AND TECHNOLOGY DIPLOMACY It refers to provision of science and technology advice to multilateral negotiations and the implementation of the results of such negotiations at the national level. It thus covers activities both at the national and international levels pursuant to international commitments.

  6. WHY SCIENCE AND TECHNOLOGY IMPORTANT IN INTERNATIONAL RELATIONS? • Emerging issues – infectious diseases, environmental concerns, ICT, Biotechnology, use of electronics in crimes.. • International trade in commodity and technology • International standard setting in the field of health, safety and environment

  7. WHY SCIENCE AND TECHNOLOGY IMPORTANT IN INTERNATIONAL RELATIONS? – Contd. • International cooperation in manufacturing and Research and Development • Foreign Direct Investments • Intellectual Property Rights Issues

  8. Receipts (R) and Payments (P) of Royalty and Licence Fee in US $ million(Source World Bank –World Development Indicators 2008 and various Issues)

  9. Licensing Receipts and payments for Japan1950-1974 (in million US $)Source: 1950-1970- Lyn (1985)-Contractor 1981

  10. Number of technology licensing agreements in Japan (1981-2001)Source: Japanese Statistics Bureau 2004

  11. CHANGING PARADIGM IN R&D NOTHING IT IS SAID, IS CERTAIN EXCEPT DEATH AND TAXES – YET ANOTHER INESCABABLE CERTAINITY IS CHANGE • Market and buyers driven – organizations can get more out of their research by linking it more closely to market need and customers requirements rather than increased spending elsewhere • R&D on ‘business like’ footing

  12. Changing paradigm in R&D (Contd.) • Time and cost of R&D is important • Expectations from R&D increased manifold • R&D is getting increasingly more multi-disciplinary in nature • Team orientation • Creativity and innovativeness of considerable significance

  13. Changing paradigm in R&D (Contd.) • Managerial skills in R&D personnel increasingly required • Borderless laboratories • Intellectual property rights issues • Changing from a strategy of ‘hope’ to a strategy of a more ‘systematic, disciplined and accountable’ R&D

  14. Changing paradigm in R&D (contd.) • Impact of Information and Communication Technologies. These are impacting R&D management systems and practices in numerous ways, creating new threats and opportunities. • Increased expectations of Head of the Institution

  15. Changing paradigm in R&D (Contd.) • Success now requires strong competitive advantage in the form of innovation, quality, agility, and or productivity – cost leadership alone is not sufficient • Measurement of performance is being emphasized for every organizational activity. Individuals are required to add value at every level. • Demographic shifts in customer and employee base has directly or indirectly influencing the way managers think and act.

  16. OPTIONS FOR TECHNOLOGY • Acquisition • In-house development • To get developed • Joint development

  17. Acquisition preferred where • Too expensive/ too long to develop or get developed • New technology on attractive terms • Customers preferences • Many technology gaps

  18. In-house development preferred where • In-house capability exists • Time and cost effective • Technology not available from outside sources • High cost of technology acquisition

  19. A manufacturing or service Unit An R&D Organisation A Technical Institute/University A Consultant TECHNOLOGYSUPPLIER A manufacturing or service Unit An R&D Organisation A Technical Institute/University A Consultant TECHNOLOGYRECEIVER TECHNOLOGY SUPPLIERS AND TECHNOLOGY RECEIVERS -A FEW EXAMPLES

  20. TECHNOLOGY SOURCING • Exhibitions and Conferences • International Organizations • Industry/Technical Journals • Directories • Industry Associations • Government Sources • Patent Literature

  21. TECHNOLOGY SOURCING (Contd.) • International Agreements • Foreign Embassies/ High Commissions in India • Data banks/ bases • Experts and consultants • Informal meets • Indian Embassies/High Commissions

  22. Assessment of technology supplier/partner • Manufacturer/R&D organization/Technical institute • Market share – National and international • Financial health • R&D set up • Ownership of technology • Authority to transfer • Reputation amongst other technology acquirers

  23. Assessment of Technology • Suitability to locally available raw materials • Skill levels required • Stage in Technology life cycle • Input-output ratios • Laboratory scale, pilot plant or commercially proven • Safety considerations

  24. Assessment of Technology (Contd.) • Environmental aspects • Status of IPR, Trade Marks etc. • National Policy Issues • Quantitative Approach

  25. Capacity building for identification of technology sources • Awareness of new technologies • Identification of technology needs • Evaluation of technology and technology supplier/ partner • Net working • International Agreements

  26. Advantages of new technologies • High financial returns • Can stay longer in market • Name recognition • First mover advantage • Enhanced value for customers • Leveraging organization's capabilities • ---

  27. Disadvantages of new technologies • May not be commercially proven • Normally not market tested • Risks of failure and commercial returns • Safety risks in operation • IPR related risks • Competitors may bring better products after watching the performance of new technology • ----

  28. TECHNOLOGY ACQUISITION

  29. TECHNOLOGY PACKAGE • Specifications of the product/output • List of components/parts • Details of each component/part • Details of assemblies and subassemblies • Operation process parameters • Quality parameters

  30. TECHNOLOGY PACKAGE – Contd. • List of purchased items • Details of Plant and Machinery • Plant Layout • Plant Maintenance Guidelines • Safety Precautions • ---

  31. Technology Acquisition Process – Complexities • Technology package has many components • Not like buying equipment or raw materials or components • Technology has cost and prices • Generally no price list • Long term relationship • Technology absorption

  32. Technology acquisition Process – Contd. • Technology Assessment and Evaluation • Negotiations • Agreement • Implementation • Technology is very dynamic • Intellectual Property Rights Issues

  33. INFORMAL General Hiring of Engineers Reverse Engineering FORMAL Licensing Outright purchase Joint Ventures Turnkey Projects Acquisition of the company Training and Experts Consultants Purchase of equipment with embodied technology MODES OF TECHNOLOGY ACQUISITION

  34. Price variance – technology life cycle

  35. Price variance – technology status

  36. FACTORS FOR SUCCESSFUL ACQUISITION OF TECHNOLOGY • Good Agreement and Documentation • Mutual Trust • Competence of Technology Supplier • Competence of Technology Acquirer • Training • Mutual Interest

  37. FACTORS FOR SUCCESSFUL ACQUISITION OF TECHNOLOGY – Contd. • Planning • Appropriate channel • --- • ---

  38. WHAT IS A GOOD AGREEMENT • Should be comprehensive in point of substance and content • Should be written in simple language with short sentences • Ambiguity and multiple interpretations to be avoided • Should be in conformity with law

  39. WHAT IS A GOOD AGREEMENT (Contd.) • Should avoid disputes • In case disputes arise, should provide for a satisfactory settlement mechanism

  40. Important clauses in Technology Transfer Agreements • Definitions • Coverage • Territory and Exclusivity • Scope of documentation • Language • Training • Terms of Payment • Currency of Payment

  41. Important clauses in technology transfer agreements (Contd.) • Schedules • Delay in payments • Taxation • Confidentiality • Guarantees • Language • Third party IPR infringement • Governing Law • Dispute settlement mechanism

  42. Important clauses in technology transfer agreements (Contd.) • Price escalation • Improvements • Environmental, Safety and other harmful effects • Sub-contracting • Mergers • Expiry and renewal • Status after expiry • Force Majeure

  43. ARBITRATION CLAUSE - An example ICA Arbitration clause :“Any disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made therein shall be binding on the parties.”

  44. Arbitration Clause (Contd.) • Alternative Clause : Any dispute and differences whatsoever arising under or in connection with the contract will be settled by arbitration in accordance with the Rules of Arbitration of UNCITRAL/The Rules of Conciliation and arbitration of the International Chamber of Commerce (ICC) – (to be retained whichever is agreed to and delete the other) • UNCITRAL – United Nations Commission on International Trade Law

  45. Arbitration Clause (Contd.) • The venue of arbitration will be in India and arbitration proceedings will be administered by the Indian Council of Arbitration (ICA). The applicable law to the contract will be laws of India or such other as may be agreed to.” • Arbitration and Conciliation Act 1996 (Based on UNCITRAL Model Law of Arbitration)

  46. OFFER FOR TECHNOLOGYAN EXAMPLE • Technology : Manufacture of Xylitol from bagasse • Process: Bagasse hydrolysis – purification – hydrogenation – concentration – crystallization – drying – packaging • Areas of application - Food industry as sweetener - Pharmaceutical industry -Light industry: as raw material

  47. OFFER FOR TECHNOLOGY (Contd.) • Advantages -Safe and flexible process line -Simple operation - Low investment -Clean production -Effluent can be easily treated - Waste can be utilized -Discharge as per international standards

  48. Offer for Technology (Contd.) • Payback period : 5-6 years • Stage of development: Commercialised • Infrastructure required : Land…, Building…, Water…, Power… • Manpower required : … • Production Capacity …. • Byproducts ….

  49. Offer for technology (Contd.) • Main raw materials required …. • Economic date : Project cost…, Working capital requirement…, ……, IRR… • Content of technology package … • Export possibilities …. • Technical document language …. • Technology supplier’ profile… • Contact ….

  50. Technology pricing- a case • Zeolite ‘A’ – A by-product from Aluminum industry used in detergents industry • Technology developed by a laboratory in 1990 • Technology licensed to two small units in 1991 • Price charged Rs. 0.2 million per license

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