Thursday, July 10, 2008

Why Hasn't Congress Decided to Allow Imports of Sugar Cane-Based Ethanol From India to Reduce Prices at the Pump??
Ethanol from sugarcane can provide energy security

By Samir Somaiya

Indian Financial Express

December 23, 2007

Ethanol is a versatile and useful product. It is produced from renewable resources such as sugarcane, corn etc, and has been used in India as a feedstock for the production of chemicals and in the manufacture of potable liquor. Rising oil prices have made energy security even more important for India, since the country imports a major chunk of the 8.6 million tonne of its petrol requirements.

This despite the fact that India can substitute a sizeable portion of its oil needs through ethanol. Brazil uses car engines that can use hydrous ethanol, anhydrous ethanol, petrol and their combinations by means of a simple sensor that adjusts the excess air fed to the carburettor based on the CH ratio of the fuel. India could also introduce these engines, and over time, technically adapt to ethanol as a fuel. Ethanol is also a feedstock for chemicals. Surplus ethanol availability would further encourage the production of chemicals from renewable resources.

India is the largest sugar consumer in the world today. Indian sugarcane is currently used to produce sugar for our domestic consumption as well as for exporting to other countries (whenever the government policy permits it and the prices are favourable) and its byproduct (molasses) is used for fermentation to produce ethanol. The ethanol is used to meet the demand of the potable and chemical industries in the country.

India is producing more sugar than it needs, by more than 8 million tonne, and most of this is stored in warehouses. This could otherwise have been made available for a programme in fuel ethanol to take place.

Current scenario: surplus of sugarcane or sugar?

India is producing too much sugar as compared to its demand. The resultant oversupply is creating a downward pressure on the market price of sugar, affecting the economics of the sugar industry and consequently the livelihood of millions of sugarcane farmers that the industry supports.

Sugarcane surplus is welcome: Sugarcane surplus needs to be looked at as an 'energy' surplus.

Surplus cane can be used to produce ethanol as is done in Brazil. Instead of storing millions of tonnes of sugar in a falling market and exporting the balance at very low international prices, the same could instead be used to produce a few billion litres of ethanol. In terms of energy value, this would be equal to a little over 3 million tonne of petrol (over 30% of our current petrol consumption).

Everyone benefits-the farmer, factory, consumer, and the country: The farmer and factory are at the mercy of the 'sugar' cycle. So long as ethanol and electricity cogeneration are 'byproducts' of cane milling, sugar will be the primary source of revenue and risk. Sugarcane needs another outlet (ethanol) to be produced as a substitute to sugar so that the factory and farmer are 'de-risked' from cane. Currently, ethanol can be produced from sugarcane and sold at a price so that all gain, the farmer, the factory as well as the consumer!

India will benefit by replacing over 30% of its current petrol requirement, saving valuable foreign exchange, and addressing the country's energy security. But this is not all. Further changes in the improvement of cane quality and cane yields, coupled with changes in public policy could replace almost all current Indian consumption of petrol.

Incremental changes can make a big difference

Biology, agronomy and biotechnology: Currently, the average yield per acre in India is 70 tonne/hectare, and the pol% (a measure of sucrose content) is 12.2%. Better varieties coupled with experiments in agronomy can result in better yielding crops (yield and pol%). Research is to be done in new sources of ethanol (tropical beet, sweet sorghum and cellulose).

Farm extension services: Developments in the laboratory have to be taken to the field by means of extremely good farm extension services. An entire ecosystem comprising relevant advice, cane varieties, inputs delivery, microfinance and support is very essential.

At the Godavari Sugar Mills, in North Karnataka, we have created such an infrastructure and have achieved average yields of 85 tonne per hectare and pol% cane of 13.7%. This is substantially higher than the Indian average of 70 tonne/hectare and 12.2% pol% cane.

Public policy: If ethanol has to be used as chemical and transportation feedstock, there need to be policies in place to encourage it. Ethanol is a renewable feedstock. It also contributes to a reduction in global warming, since sugarcane grown will be a carbon dioxide sink. The government has taken a step in the right direction by announcing 5% blending from October 2007, and 10% by October 2008. However, these percentages must not limit our imagination on the degree of substitution that we can achieve, and could instead serve as a minimum mandate.

Efficient markets: Molasses and ethanol cannot be transported freely across state borders. Whereas the European Union continues to integrate and expand as an economic unit, India continues to function in the form of mini states within a state.

Sugar companies must be free to optimise production between ethanol, sugar or any other product. Markets must determine whether the sugarcane juice will flow to ethanol or sugar production or any other new product. Prices will determine new equilibria. Similarly, companies must be free to decide whether to use ethanol for chemical or fuel needs.

A possible future

* Now National target

* Area under cane (million hectare) 5.4 5.67

* Cane yield (tonne/hectare) 70 80

* Sucrose content (pol%) 12.2 13.2

* Increase in sugar stocks/exports 8.3 0in year (million tonne)

* Is total domestic sugar, industrial Yes Yesethanol and potable demand met

* Ethanol excess available for fuel or 0.8 10.1chemical programme (million tonne)

Possible criticism and responses

* Whether India will always have a supply surplus of 8 million tonne a year? Supply of sugarcane will be influenced by demand (which will determine price) and climate. Climate shocks can affect sugarcane availability. In the past many years, government interventions in cane price and policy regarding sugar sale have exacerbated the volatility of the sugarcane planting cycle. With a healthy demand for sugarcane derived products (sugar-local or international, ethanol-for fuel, potable or chemical use), the price of the end product would remain healthy and cane price and availability would be assured.

* As the Indian economy grows, how will the growing need of energy be met? Firstly, the current analysis reflects an improvement over current ethanol availability from sugarcane. The targets set are still lower than many have achieved. Further, in the future, other sources of ethanol such as sweet sorghum and cellulose could be developed to meet increasing demand.

* Whether the targets set are achievable? There are many companies and areas in India that are surpassing the set targets of yield per acre and pol% cane. Certainly, climate and soil do play an important role, but interventions of microfinance, input supply, biotechnology and cane extension can certainly help in achieving better results.


Cane yield (tonne/hectare) Pol% Cane
* Now 70 12.2
* National target 80 13.2
* Godavari 85 14
* Best 100+ 15+

* Whether cars can run on ethanol? In a country like Brazil, there is a sensor that is inserted in car engines to measure the C ratio. The excess air is fed to the carburettor accordingly and the car is capable of consuming ethanol, gasoline, or a combination of the two. Just as LPG driven cars have spread in India, these cars could also spread and increase in popularity in the future.
Future changes

Ethanol for fuel is currently planned to be distributed through oil companies. There is no reason for ethanol to be distributed only in this manner. Sugar companies could supply directly to 'fuel' pumps or set up their own distribution systems. Earlier distribution systems were based on centralised refining. The future will belong to distributed production and generation. Our laws and logistics will have to be adapted to reflect the new reality and cope with new challenges.


There will be plenty of sceptics who will find these results impossible. However, we must remember that we are planning for the nation's future and not simply for the next one year.

Since incremental changes can make a large impact on resource availability, there is a need to bring together a common will and diverse expertise. The results cannot be achieved nationally if approached independently. Governments, research institutions, universities, companies, bankers, NGOs and farmers have to work together to achieve the goal. It is in our best and long term interest.

The writer is executive director of the Godavari Sugar Mills Ltd and vice-president of the Indian Sugar Mills' Association


India's States in Favour of More Ethanol Blending

By Nigam Prusty


INDIA: October 4, 2007

NEW DELHI - India's states have agreed to 10 percent blending of ethanol with petrol from October 2008 and are in favour of allowing sugar mills to directly produce the biofuel from sugarcane juice, the farm minister said.

"We have reached general understanding with state governments on 10 percent blending of ethanol for fuel to be made mandatory from October 2008," Sharad Pawar told reporters on Wednesday after meeting state officials.


Pawar said there was also agreement that producing ethanol directly from sugarcane juice should be permitted.

India currently allows five percent blending of ethanol made from molasses with petrol. The federal cabinet will now take up the issue of doubling this to 10 percent.

Impediments on the free movement of denatured ethanol and local taxes should also be scrapped, Pawar said, saying the moves were supported by state officials.

Pawar earlier said that directly converting sugarcane juice into ethanol probably offered the country's troubled mills a way out of recurring problems.

"The answer to the cyclic problem faced by the Indian sugar industry probably lies in conversion of surplus sugarcane directly into ethanol," he said.

He added ethanol production should be controlled in years when cane supplies were tight so sugar output was not affected. [THAT WOULD BE WISE.]

India's sugar production in the new season that began on Oct. 1 is expected to top 29 million tonnes, up from a record 28 million tonnes, the minister said.

With domestic consumption estimated at 19 million tonnes and exports placed at 1.5 million tonnes, the country is expected to have a huge opening stock of 11.9 million tonnes on Oct. 1.

"The sugar industry in India is facing an unprecedented crisis situation," Pawar said, adding that domestic and international prices were unlikely to improve much in the new season.

Sugar is one of the few industries which is still under government control. It fixes prices which mills have to pay to cane farmers and also administers policy on setting up new mills.

"The time has now come to review the controls and move towards deregulation," Pawar said, but he offered no details.

Pawar said even though India has tremendous potential to produce and use ethanol as a fuel, policy has not provided the right degree of encouragement.

Sugar mills have been shying away from investments in the industry due to complex taxes imposed by some states, he said.


Inefficient Funding and Agricultural Practices Prevent a Growing India From Feeding Itself

India's growth outstrips crops

By Somini Sengupta

International Herald Tribune

June 22, 2008

JALANDHAR, India: With the right technology and policies, India could help feed the world.

Instead, it can barely feed itself.

India's supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis.

It was not supposed to be this way.

Forty years ago, a giant development effort known as the Green Revolution drove hunger from an India synonymous with famine and want. Now, after a decade of neglect, this country is growing faster than its ability to produce more rice and wheat.

The problem has grown so dire that Prime Minister Manmohan Singh has called for a Second Green Revolution "so that the specter of food shortages is banished from the horizon once again."

And while Singh worries about feeding the poor, India's growing affluent population demands not only more food but also a greater variety.

Today Indian agriculture is a double tragedy. "Both in rice and wheat, India has a large untapped reservoir. It can make a major contribution to the world food crisis," said S. Swaminathan, a plant geneticist who helped bring the Green Revolution to India.

India's own people are paying as well. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor, and inflation has soared past 11 percent, the highest in 13 years.

Experts blame the agriculture slowdown on a variety of factors.

The Green Revolution introduced high-yielding varieties of rice and wheat, expanded the use of irrigation, pesticides and fertilizers, and transformed the northwestern plains into India's breadbasket. Between 1968 and 1998, the production of cereals in India more than doubled.

But since the 1980s, the government has not expanded irrigation and access to loans for farmers, or to advance agricultural research. Groundwater has been depleted at alarming rates.

The Peterson Institute for International Economics in Washington says changes in temperature and rain patterns could diminish India's agricultural output by 30 percent by the 2080s.


Family farms have shrunk in size and quantity, and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings.

Among farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets.

A long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, a World Bank study found, far less than farmers in, say, Thailand or the United States.

Surinder Singh Chawla knows the system is broken. Chawla, 62, bore witness to the Green Revolution and its demise.

Once, his family grew wheat and potatoes on 20 acres. They looked to the sky for rains. They used cow manure for fertilizer. Then came the Mexican semi-dwarf wheat seedlings that the revolution helped introduce to India. Chawla's wheat yields soared. A few years later, the same happened with new high-yield rice seeds.

Increasingly prosperous, Chawla finally bought his first tractor in 1980.

But he has since witnessed with horror the ills the revolution wrought: in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields.

By the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water.

Here in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature.

Between 1980 and 2002, the government continued to heavily subsidize fertilizers and food grains for the poor, but reduced its total investment in agriculture. Public spending on farming shrank by roughly a third, according to an analysis of government data by the Center for Policy Alternatives in New Delhi.

Today only 40 percent of Indian farms are irrigated. "When there is no water, there is nothing," Chawla said.

And he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle. Last summer, he wanted to ease out of growing rice, a water-intensive crop.

The gains of the Green Revolution have begun to ebb in other countries, too, like Indonesia and the Philippines, agriculture experts say. But the implications in India are greater because of its sheer size.

India raised a red flag two years ago about how heavily the appetites of its 1.1 billion people would weigh on world food prices. For the first time in many years, India had to import wheat for its grain stockpile. In two years it bought about 7 million tons.

Today, two staples of the Indian diet are imported in ever-increasing quantities because farmers cannot keep up with growing demand pulses, like lentils and peas, and vegetable oils, the main sources of protein and calories, respectively, for most Indians.

"India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed," said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. "When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels."

In April, in a village called Udhopur, not far from here, Harmail Singh, 60, wondered aloud how farmers could possibly be expected to grow more grain.

"The cultivable land is shrinking and government policies are not farmer friendly," he said as he supervised his wheat harvest. "Our next generation is not willing to work in agriculture. They say it is a losing proposition."

The luckiest farmers make more money selling out to land-hungry mall developers.

Gurmeet Singh Bassi, 33, blessed with a farm on the edges of a booming Punjabi city called Ludhiana, sold off most of his ancestral land. Its value had grown more than fivefold in two years. He made enough to buy land in a more remote part of the state and hire laborers to till it.

Meanwhile, Chawla's neighbors migrated to North America. They were happy to lease their land to him, if he was foolish enough to stay and work it, he said. Today, he cultivates more than 100 acres.

Last year, on a small patch of that land, he planted what no one in his village could imagine putting on their plate: baby corn, which he learned was being lapped up by upscale urban Indian restaurants and even sold abroad.

At the time, baby corn brought a better profit than the government's price for his wheat crop.

This had been the Green Revolution's other pillar: a fixed government price for grain. A farmer could sell his crop to a private trader, but for many small tillers, it was far easier to approach the nearest government granary, and accept their rate.

For years, those prices remained miserably low, farmers and their advocates complained, and there was little incentive for farmers to invest in their crop. "For farmers," said Swaminathan, the plant geneticist, "a remunerative price is the best fertilizer."

Swaminathan's adage proved true this year. After two years of having to import wheat, the government offered farmers a substantially higher price for their grain: farmers not only planted slightly more wheat but also sold much more of their harvest to the state. As a result, by May, the country's buffer stocks were at record levels.

Nanda Kumar, India's most senior bureaucrat for food, said the country would not need to buy wheat on the world market this year. That is good news, for India and the world, but how long it will remain the case is unclear.

Will greater demand for food and higher market prices enrich farmers, eventually, encouraging them to stay on their land? There is potential, but other conditions, like India's inefficient transportation and supply chains, would have to improve too.

How to address these challenges is a matter of debate.

From one quarter comes pressure to introduce genetically modified crops with greater yields; from another come lawsuits to stop it. And from yet another come pleas to mount a greener Green Revolution.

Alexander Evans, author of a recent paper on food prices published by Chatham House, a British research institution, said: "This time around, it needs to be more efficient in its use of water, in its use of energy, in its use of fertilizer and land."

Swaminathan wants to dedicate villages to sowing lentils and oilseeds, to meet demand. The World Bank, meanwhile, favors high-value crops, like Chawla's baby corn, because they allow farmers to maximize their income from small holdings.

The market may yet help India. Chawla, for instance, has replaced baby corn with sunflowers, prompted by the high price of sunflower oil. For the same reason, he is also considering planting more wheat.

The Indian & Pakistani Peace Pipe(line)

Pakistan says gas project offers South Asia peace hope

By Krittivas Mukherjee


June 27, 2008

Pakistan's foreign minister on Friday touted a cross-border deal bringing gas from Iran to India as a "pipeline of peace".

India and Pakistan, which have gone to war three times since independence in 1947, are trying to re-invigorate a sluggish four-year-old peace process.

Both are also desperate to tie up future energy supplies to fuel their fast-growing economies, but the United States has tried to discourage any deal with Iran because it suspects Tehran is trying to build nuclear arms.

"It can be a pipeline of peace and new bondage," Shah Mehmood Qureshi, on a three-day visit to India, told a news conference.

"The IPI (Iran-Pakistan-India) gas pipeline is to our mutual benefit. Both sides stand to gain."
India has been cautious about the $7.6 billion pipeline project, triggering a pledge from Iran and Pakistan to press ahead without Indian participation.

Analysts say New Delhi wants to reduce the risk of supplies being cut during times of tension with Pakistan and is under pressure from Washington to back down from the deal.

India had missed a meeting in September, citing issues including transit fees and transportation tariffs with Pakistan. India has disgreed over the delivery point of the gas -- the point where India takes control of supplies.

Officials from India, Pakistan and Iran will meet next month in Tehran over the pipeline.

"We are hopeful that it will be possible to resolve this issue both from technical, commercial and all aspects," India's Foreign Minister Pranab Mukherjee said.


Work on the pipeline could begin next year and is due to be finished by 2012.

It would initially transport 60 million cubic metres of gas (2.2 billion cubic feet) daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cubic metres.

Pakistan's new civilian-led government has high hopes of building better relations with India and the pipeline is seen as a platform for mending ties.

The nuclear-armed rivals began a peace process more than four years ago, having gone to the brink of a fourth war in 2002, but had been in a lull because of political turmoil in Pakistan.

"The political environment to make the peace process result-oriented is right on both sides," Qureshi said.

"We must not miss this opportunity. It would be great loss."

No reference was made to the disputed Himalayan region of Kashmir which the two countries claim in full but rule only in part.

Mukherjee said Indian and Pakistani foreign officials would meet in New Delhi on July 21-22 to try to push peace talks forward. (Editing by Alistair Scrutton)


The Ultimate Lubricant:Oil and Indo-Pak Ties

By Siddharth Srivastava


OCTOBER 2004 Volume V • Issue 10

Despite harsh rhetoric, the economic benefits of cooperation on an Iran-Pakistan-India gas pipeline could open the door to warmer India-Pakistan ties, writes Siddharth Srivastava.

The just concluded first round of the composite dialogue process between India and Pakistan witnessed a war of words stretched to the limits of inimical diplomatic exchange. The foreign ministers of India Natwar Singh and Pakistan Khurshid Mehmood Kasuri said everything that one hoped would not be said, in a public platform.

Both the sides highlighted the two issues that the other does not want to hear much about — while Pakistan talked about “human rights violations” in the Indian portion of Jammu & Kashmir, India expressed “serious concerns” over Pakistan promoting cross-border terrorism.

Yet, there is a silver lining to the exchange which could form the future bedrock against relations turning awry — a decision has been taken to involve for the first time the petroleum ministers of the countries to discuss the Iran-Pakistan-India gas line, which many observers here feel could set the course for a sustained and long-term peace between the two countries which almost went to war a couple of years ago and were involved in a low-intensity conflict at Kargil in 1999.

In the couple of days that Kasuri had been here, he covered almost every aspect of the Kashmir issue that generally does not go down well with India. For most part of his visit he was closeted with separatist Hurriyat leaders of the state to convince them to sink their differences and form a united front once more, while the Indian stand is that free, fair and popular elections have been held in the state which the Hurriyat boycotted and hence other political parties should be given equal importance; Kasuri insisted that any talks with India should involve representatives of Kashmir as well, making the discussions “tripartite,” while India’s stand is that the Indian portion of J&K is an inalienable part of India with the Indian government vested with full authority to discuss any issue concerning the state; Kasuri also mooted the proposal of a separate appointment of “high representatives” to discuss Kashmir, which India feels is not necessary given the high-level official exchanges that are already in place as part of the peace process.

In short, Kasuri ensured the centrality of Kashmir despite his later re-iteration that Kashmir is not the “unifocal” area of interest between the two countries. Natwar Singh, on his part, also did not leave any stone unturned to appeal to the hardliners in India, by concentrating quite a bit of his talk on the issue of Pakistan’s promotion of cross border terrorism and the human rights violations in the Pakistan portion of Kashmir during the joint press conference that the two ministers addressed. The one fall out of the exchange has been that the bus service from Indian Kashmir to Pakistan, which the local population is in much favor of, seems to be mired in technical difficulties.

Indeed, analysts here believe that any short-term diplomatic breakthroughs have reached a cul-de-sac, with Kashmir and terrorism as the main stumbling blocks that show no immediate sign of resolution. The fundamentalist and jihadi elements in Pakistan are deep-rooted within the Army and sections of Pakistani society that will make it difficult for Pakistan President Pervez Musharraf to take on militants head-on even if he wants to. The clear indicators are the assassinations attempts that the general narrowly escaped around the time that former Indian prime minister Atal Behari Vajpayee and Musharraf were trying to break the ice in January this year. And as long as the militant view exists, no Pakistan leader can be seen going soft on Kashmir.

Though both the countries are committed to continue the peace talks with a meeting of Indian Prime Minister Manmohan Singh and Musharraf slated in New York, observers here are looking at economics creating the necessary momentum to propel the two nations forward. Thus, many here are attaching as much, if not more, importance to the luncheon meeting between Kasuri and India’s Petroleum Minister Mani Shankar Aiyer, who wants to push through the Iran-Pakistan-India oil pipeline, a $3.5 billion project designed to transfer gas from Iran to India through Pakistan.

Negotiations on the 1,600-kilometre pipeline began in 1994, but no headway has been made until now because of tensions between Pakistan and India and the project’s massive cost.

Officials said warming ties between India and Pakistan despite the known prejudices augurs well for the project. For Iran, which holds the world’s largest gas reserves after Russia, India is as important as the European market that it hopes access through a pipeline across Turkey. India, which imports nearly 70 percent of its annual energy needs, has been using ships to ferry liquefied natural gas from Iran because it fears a gas pipeline running through Pakistan could be targeted by militants.

There is a visible change in the approach now. “India and Pakistan have recognized the importance of available energy resources in the region,” Kasuri told reporters after meeting Aiyar. “Officials from our ministries of petroleum and gas will meet later this year to discuss issues of multifarious dimensions,” he added.

“If our security concerns are adequately addressed, this project could turn out to be the economic bedrock which could buttress many more economic cooperation proposals,” a spokesperson for the foreign ministry said. “The economic gains for Pakistan, estimated at between $600 million and $800 million annually in transit fee alone, are a reasonable guarantee against sabotage,” the official added.

In order to make the proposal viable India has offered that it could meet the entire diesel requirements of Pakistan by laying a pipeline from Jalandhar (in Punjab) to Lahore. In turn, Pakistan could help in laying the gas pipeline from Iran to the Indian state of Gujarat. Pakistan currently imports 4.5 million tons of diesel every year from Kuwait and other Middle Eastern countries. Pakistan has said that it may review its ban on imports of diesel from India to try to reduce its dependence on Middle Eastern supplies. India’s largest refiner, Indian Oil Corporation, which has pipelines running close to the Pakistan border, has submitted a proposal to export surplus diesel to Pakistan.

The oil pipeline, accompanied by revenues, will create a constituency within the Pakistan establishment as well as in India that will root for normal relations and could over time and more economic co-operation. This could be a powerful deterrent to two major institutional stumbling blocks — the vested interests in the Pakistani Army which clamors for funds and importance in order to promote anti-India militants, and the Hindu nationalist hardliners in India.

Indeed, observers detect a strong element of realpolitik even if couched by the harsh Kashmir language, among Pakistani leaders, the beginning of which was made during the South Asian Association for Regional Cooperation summit in Islamabad this year. The summit led to significant breakthroughs on the economic front, primarily in crafting the framework agreement on South Asian Free Trade Area. This will sharply boost economic cooperation over the next decade in the region, primarily between India and Pakistan. Pakistan had blocked SAFTA for as long as it could, but its economic woes have compelled it to change tack.

The most pressing factor in changing Pakistani diplomacy is the rising demand of its citizens for economic progress. Television images of an economically promising India have made an impact on the masses. Industry leaders of Karachi and Lahore, as well as people in Federally Administrated Tribal areas and the North West Frontier Province are also asking for their share of progress. Pakistan’s economy is growing at a sluggish 4 percent; India’s growth rate is double the figure. Twenty-five percent of Indians live in poverty; in Pakistan the figure is 35 percent.

From India’s point of view the Manmohan Singh government is now showing signs that it is serious about taking forward the peace process initiated by Vajpayee. The last thing it wants is to be labeled as having failed to make progress in what is considered to be Vajpayee’s biggest achievement when he was in power. Before the Kasuri visit Manmohan met Vajpayee over breakfast to glean his mind. Vajpayee advised Manmohan not to pursue the beaten path. Is oil and gas, then, the road not taken?

- Siddharth Srivastava is India correspondent for Siliconeer. He is based in New Delhi.

India Should Carefully Study Proposed Future Pharma Business & Technology Models

'Virtual man’ to aid pharma R&D, says PwC report

Financial Express

June 21, 2008

By 2020, the pharma R&D process may be shortened by two-thirds, success rates may dramatically increase and clinical trial costs could be cut substantially. And how? New computer based technologies will create a greater understanding of the biology of disease and the evolution of ‘virtual man’ to enable researchers to predict the effects of new drug candidates before they enter human beings.

According to a research launched by PricewaterhouseCoopers, entitled `Pharma 2020: Virtual R&D, which path will you take?’
($file/pharma_2020_rd.pdf ), the industry is at a pivotal point in its evolution, particularly in relation to R&D. The patents on many of the medicines launched in the 1990s will expire over the next few years, leaving it very exposed and only four out of the top 10 companies have enough products in their pipelines to fill the impending revenue gap.

Reduced productivity of effective novel treatments in the lab means that additional improvements to R&D are no longer enough. The resulting commercial deficit in pharma has enormous ramifications for industry, society and governments as a whole. In order to remain at the forefront of medical research, help patients live longer healthier lives and deliver the revenue returns that shareholders have come to expect, pharma needs a faster, more predictive way of testing molecules before they go into humans.

Says Sujay Shetty, associate director in PricewaterhouseCoopers for the pharmaceutical practice in India:

“Investments made by the pharmaceutical industry into R&D should not be allowed to suffer, and this issue should be at the forefront of the socio-political agenda in India. As a society we have to be conscious that any financial constraints in pharma leading to reduction in R&D will also lead to reduction in new and improved medication.”

‘Virtual man’ could ultimately evolve from the deployment of existing technologies that are connected in a new way. Models of the heart, organ, cells systems and musculoskeletal architecture are already being developed by academics around the world. Such technologies can be used to simulate the physiological effects of interacting with specific drugs and identify which drugs have a bearing on the course of a disease. Some companies using virtual technology have reduced clinical trial times by 40% and reduced the number of patients required by two thirds.

Of course, virtually-modelled molecules will still have to be tested in real human beings.

However as a complete picture is developed of human biology and reliable biomarkers for identifying and monitoring patients become widely available, pharma companies will be able to optimise their trial designs and minimise the number of patients on whom new medicines are tested. They will develop treatments which have value in the eyes of patients, healthcare payers and for the companies themselves.

“New technologies will help pharma move forward, and will augment its capability of producing treatments which have measurable improvements in safety, efficacy and ease of compliance.

“Such treatments are valuable not only to healthcare spenders but also to companies creating them. They will result in considerable savings, and could also halve development time and attrition rates, thereby reducing the costs per drug radically”, says Sujay.

The necessary in-depth knowledge about the human body and the pathophysiology of disease will be generated through a collaborative research network of pharmaceutical companies, academia, independent research houses, IT providers, industry regulators, payers and providers.

For the first time, pharma will have to consider sharing intellectual property (IP) with other research bodies and potentially new entrants such as IT providers.

Pharma industry across the globe is witnessing two significant trends: Stagnating R&D pipelines and Generic erosion on big pharma’s revenues. MNC pharma companies will see their business eroded due to generic competition by as much as 13% to 40% in the coming five years. Most exposed are Pfizer, Lilly, BMS and Astra Zeneca. The other area where MNC pharma will have to reform is R&D. These are future models which apply to drug development in the western world and which India pharma who have aspirations to become drug discovery companies may do well to study, he added.


Pharmaceutical Companies Will Use Virtual R&D to Increase Innovation and ReduceCommercial Deficit, According to New PricewaterhouseCoopers Report, Pharma 2020

NEW YORK, June 20, 2008 (PRIME NEWSWIRE) -- By 2020 the pharmaceutical researchand development (R&D) process may be shortened by two-thirds, success rates maydramatically increase and clinical trial costs could be cut substantially,according to a report issued today by PricewaterhouseCoopers entitled Pharma 2020: Virtual R&D, which path will you take?

The report forecasts that new computer-based technologies will create a greaterunderstanding of the biology of disease and the evolution of 'virtual man' toenable researchers to predict the effects of new drug candidates before they aretested in human beings. Along with changes underway in the regulatory and socio-political environment, this will enable the pharmaceutical industry toovercome one of the most fundamental issues it needs to resolve over the next decade: The lack of innovative new drugs being introduced into the market.

As outlined in PricewaterhouseCoopers' previous report Pharma 2020: The Vision, the pharmaceutical industry is at a pivotal point in its evolution, particularlyin relation to R&D. The patents on many medicines launched in the 1990s will expire over the next few years, leaving pharma very exposed. Only four out ofthe top 10 companies have enough products in their pipelines to fill the impending revenue gap.

"Plummeting productivity of effective novel treatments in the lab means incremental improvements to R&D are no longer enough," said Steve Arlington,PricewaterhouseCoopers' global pharmaceutical and life sciences industryadvisory leader. "The resulting commercial deficit in pharma has enormous implications for the industry, society and governments as a whole. To remain atthe forefront of medical research, help patients live longer, healthier livesand deliver the revenue returns shareholders have come to expect, pharma needs afaster, more predictive way of testing molecules before they go into humans."

"Equally, as a society we must acknowledge that we cannot afford to suffocate the investments made by the pharmaceutical industry in R&D; a concern that should be high on the socio-political agenda," added Arlington.

"We have to face the issue that if pharma is no longer financially capable of this, there is a question where the next new medicine will come from."

'Virtual man' could ultimately evolve from the deployment of existingtechnologies that are connected in a new way. Some companies using virtualtechnology have reduced clinical trial times by 40 percent and reduced thenumber of patients required by two-thirds. Models of the heart, organ, cellssystems and musculoskeletal architecture are already being developed byacademics around the world. Such technologies can be used to simulate thephysiological effects of interacting with specific drugs and identify whichdrugs have a bearing on the course of a disease.

Of course, virtually-modeled molecules will still have to be tested in realhuman beings. However, as a complete picture is developed of human biology andas reliable biomarkers for identifying and monitoring patients become widelyavailable, pharma companies will be able to optimize their trial designs andminimize the number of patients on whom new medicines are tested. They willdevelop treatments that have value in the eyes of patients, healthcare payersand for the companies themselves.

The necessary in-depth knowledge about the human body and the pathophysiology of disease will be generated through a collaborative research network ofpharmaceutical companies, academia, independent research houses, IT providers,industry regulators, payers and providers.

For the first time pharma will haveto consider sharing intellectual property (IP) with other research bodies andpotentially new entrants such as IT providers.

By 2020, decisions about reimbursement and licensing will fall under theauspices of regulatory bodies that are much more aligned with industry and otherstakeholders. By 2020, the cumbersome, all-or-nothing approach will be replaced by a cumulative process, based on the gradual accumulation of data.

Once there is sufficient evidence to show that a medicine genuinely works and is costeffective in the initial trial population, the regulator will be able to issue a"live license", allowing the sponsoring company to market the treatment on arestricted basis.

With each incremental increase in evidence of safety, efficacy and value, the regulator will extend the license to cover more patients, different indications or different formulations, the study predicts.

The pharmaceutical industry requires assistance in the form of better incentives to research and develop medicines that prevent or cure disease. Today the industry IP frameworks do not provide the incentives needed to alter the agenda from one of treatment to that of prevention and cure, note the authors.

"New technologies can play a major role in helping pharmaceutical companies moveforward -- enhancing its ability to produce treatments that deliver measurable improvements in safety, efficacy and ease of compliance - treatments that have value in the eyes of healthcare payers as well as those of the companies making them," said Anthony Farino, PricewaterhouseCoopers' U.S. pharmaceutical and lifesciences advisory leaders. "They will also deliver substantial savings -- they could collectively halve development times and attrition rates, thereby reducing costs per drug dramatically.

He added, "Technology is not the answer to all pharma's problems. Many companies as well as the infrastructure of regulators and vendors that support the industry will have to make significant strategic, organizational and behavioral changes.

Overhauling R&D requires a decision on whether the organization wants to produce mass-market medicines or specialty therapies[;]

where they want to be located geographically to have access to the best skills or cost base[;]

and whether they want to outsource most of their research and development or keep itin-house.

The choices they make will have a profound bearing on the business models and mix of skills they require as well as the skills of those who support them. Connectivity - technological, intellectual and social - will ultimately enable us to make sense of ourselves and the diseases from which we suffer."

India Would Be Wise To Ensure Boehringer's Continued Investment in the Country By Overseeing the Just Application of its Patent Laws
India rejects Boehringer's AIDS drug patent plea

By Rupali Mukherjee

The Times of India

20 Jun 2008

NEW DELHI: In one of the landmark judgments on patents which would benefit HIV patients, Indian Patent Office on Thursday rejected a patent application filed by multinational pharma company Boehringer Ingelheim on paediatric form of anti-AIDS drug nevirapine.

The company was trying to claim a patent on the syrup form of nevirapine, which is particularly important for children living with HIV who are unable to swallow tablets.

[THE INDIAN GOVERNMENT MUST REMEMBER HOW, EARLIER THIS YEAR, BOEHRINGER REFUSED TO LAUNCH & REGISTER ITS ANTI-AIDS DRUG TIRANAVIR IN BRAZIL BECAUSE THE MANNER IN WHICH THE BRAZILIAN GOVERNMENT HAS IMPLEMENTED ITS PATENT LAW WOULD LIKELY RESULT IN THE BREAKING OF THE DRUG PATENT. "...the decision was taken already in the middle of 2006, before the compulsory license of other medicine against aids, efavirenz, that took place in May last year. Nevertheless, this decision was never turned public. Partners of the company, nevertheless, affirmed to the newspaper that the compulsory licensing buried the possibility of the medicine be made available in Brazil." See German Pharmaceutical Company Chooses NOT to Register Drug in Brazil Due to Risk of Patent Expropriation, ITSSD Journal on Intellectual Property, at: ].

This is the first decision from the Patent Office on the 13 patent oppositions filed by public health groups against AIDS drugs, and will set an important precedent for the pending patent applications, industry expert pointed out.

If the patent had been granted, price would have increased for children suffering from AIDS. In May 2006, the Indian Network of People Living with HIV/AIDS (INP+) and the Positive Women's Network (PWN) had filed a pre-grant opposition against the company's application.


"We opposed the patent application on nevirapine hemihydrate (syrup) to ensure that it remains available for our children and to make sure that the government doesnt say it is too expensive to provide," said, P Kousalya, president of PWN.

Nevirapine is an important anti-retroviral drug, invented in 1989, and was not patentable in India.

"Accessing appropriate paediatric formulations of AIDS drugs has been a particular problem around the world, and we hope that this decision can be a step towards making them more available," she added.

The Indian Patents Act contains some important safeguards designed to ensure that ‘‘frivolous patent applications are not granted at the cost of public health. These include section 3(d) of the Patents Act, which prevents many "new forms" of known substances from being patented unless there is a significant improvement in efficacy, and section 3(e) of the Act, which prevents "mere admixtures" of substances from being patented.

Brazil Opposes India's Emerging Pro- Patent Policy as Part of its Global Universal Access to Healthcare Strategy?

Brazilian group opposes Gilead's AIDS drug patent

By Neelam Raaj

Times of India

June 27, 2008

India's generic drug industry is a lifeline for millions of AIDS patients in developing countries. Now in a bid to protect access to this lifeline, a foreign patient group has for the first time filed an opposition against the grant of a patent in India to US-based Gilead Sciences for the key AIDS drug tenofovir.

Brazilian AIDS advocacy group ABIA (Brazilian Inter-disciplinary AIDS Association), which filed the opposition along with Indian NGO, Centre for Residential Care & Rehabilitation), says the step was necessary since a patent in India would have a direct impact on ability of Brazil to produce and access affordable generic versions of tenofovir.

The patent has been opposed on the grounds that the drug is only an addition of a salt (fumaric acid) to an existing compound (tenofovir disoproxil) and not a new invention. India's Patents Act includes a provision against patenting of minor improvements of known medicines: Section 3(d)).

The law allows any party to oppose patent applications. In 2006, Indian patient groups had also registered their pre-grant opposition to a patent on tenofovir.

Now, Brazil has entered this patent battle. An opposition to Gilead's patent application on tenofovir has also been filed in Brazil. The patent offices in both India and Brazil will be reviewing the case in July.

Tenofovir, a second-generation drug with fewer known side effects, has emerged as an important option for patients starting AIDS treatment for the first time, and those who have been on anti-retroviral treatment therapy (ART) for some time and require access to newer drugs due to occurrence of toxic effects or as they develop resistance to first-line drug regimens.

The drug is recommended under the updated World Health Organization (WHO) ART guidelines.

[FREE] Access to affordable tenofovir is particularly important for Brazil, as by the end of 2008, an estimated 31,000 people living with HIV will receive the drug through its national treatment program.

The Rise of Chinese-Indian Duality

China and India Join Forces

By Michael van der Galien, Editor-in-Chief


Jan. 21, 2008

[THE IMAGE ABOVE DEPICTS THE WELL KNOWN SYMBOL OF CHINESE PHILOSOPHY KNOWN AS 'YIN and YANG' (See: The Internet Encylopedia of Philosophy, at:; Chinese Philosophy, Yin and Yang, at: ; Wikipedia, Yin and Yang, at: ].

Via The Hindu comes the following document: “A Shared Vision for the 21st Century of the Republic of India and the People’s Republic of China” ( ).

The main idea behind the document? Since both countries are on the rise and since, combined, they “represent more than one-third of humanity,” “[t]he two sides are convinced that it is time to look to the future in building a relationship of friendship and trust, based on equality, in which each is sensitive to the concerns and aspirations of the other.”

It goes on to say that “[t]he two sides believe that in the new century, Panchsheel, the Five Principles of Peaceful Co-Existence, should continue to constitute the basic guiding principles for good relations between all countries and for creating the conditions for realizing peace and progress of humankind.”

According to China and India, “[a]n international system founded on these principles will be fair, rational, equal and mutually beneficial, will promote durable peace and common prosperity, create equal opportunities and and eliminate poverty and discrimination.”

Interestingly, the document also says the following: “The two sides believe that the continuous democratisation [sic - ha! that one was for Canadian, Indian and British readers] of international relations and multilateralism are an important objective in the new century.”

What does this ‘democratization’ mean? Well, for one thing: India wants more influence in the United Nations. “The Chinese side understands and supports India’s aspirations to play a greater role in the United Nations, including in the Security Council.”

Head on over to read the document yourself in its entirety if you’ve got time to do so today: it’s quite an interesting read. They also mention global warming (they realize its a problem and want to do something about it) and globalization (which they consider to be a very good thing).

One thing is clear: India and China realize they’re the great powers of the future and they want to befriend each other, not become each other’s enemies. They also realize that free trade benefits them and that the world needs more, not less, globalization.

There's More Than One Way to Skin a Dragon: India Should Create a New Class of Patents

India Lags Behind China by Ten Years with Respect to Patent Application Filings

June 22, 2008

Approximately 35,000 patent applications (those with a validity of 20 years from their filing date, once granted) were filed at the Indian Patent Office (IPO) during the 2007-08 fiscal year, which indicates a 21 percent growth over the previous year.

In contrast, the State Intellectual Property Office of China (SIPO) received a total of 245,161 20-year patent applications in 2007.

This made China the third most prolific patent-filing country in the world after the United States and Japan. Patent filing has been growing both in India and China at approximately 20 percent per year. However, the SIPO received approximately the same number of 20-year applications in 1997 as the IPO did in 2007-08. This implies that India is approximately 10 years behind China.

Another remarkable difference between China and India is in their ratio of domestic to foreign filing:

In 2007, filings by domestic applicants in China accounted for 62.4 percent of the 20-year patent applications with the SIPO. Furthermore, during this period, the year-on-year increase in domestic 20-year patent application filing in the country was 25 percent, whereas that of foreign filings was only 4.5 percent.

In contrast, only 24,505 patent applications were filed at the IPO in 2005–06, of which domestic applicants filed approximately 20 percent (4,855 applications) and foreign applicants filed 80 percent (19,650 applications). Further, while the number of patent applications filed by foreigners in India rose dramatically and witnessed an annual growth of 77 percent in 2005-06, the corresponding growth in domestic application filing (applications first filed with the IPO and then elsewhere) was only 20 percent during the same period.

The research conducted by Evalueserve – a global research and analytics firm – on IPO patent applications published during 2005 to 2007 indicates that only 22 of the top 200 filers (11 percent) were ‘pure-bred’ Indian organizations, of which nine were pharmaceutical companies and six research institutes. During this period, the Council of Scientific and Industrial Research (CSIR), Qualcomm, Bayer, Philips, Hindustan Unilever, Honda, Microsoft, Samsung, Pfizer and BASF were found to be the top 10 filers.

Evalueserve’s study analyzes the patenting trends of the top domestic Information Technology (IT) and IT Enabled Services (ITES) companies, and illustrates that these firms had a disproportionately low number of patent filings, especially in view of the revenue that they generate. None of these companies, including TCS and Infosys with only 35 and 29 published applications, respectively, feature in the Top 200 list of filers with the IPO. On the other hand, six domestic pharmaceutical and biotech companies – Ranbaxy, Dr. Reddy’s Labs, Orchid Pharmaceuticals, Cadila Healthcare, Cipla and Sun Pharmaceuticals – appear in the Top 100 list and another three – Aurobindo Pharmaceuticals, Torrent Pharmaceuticals and Matrix Labs – appear in the next 100 list of filers with the IPO.

[FOR EXAMPLE, MANY PATENTS APPLIED FOR DO NOT SATISFY ALL OF THE RIGOROUS REQUIREMENTS FOR 'PATENTABILITY' (e.g., "the invention does not involve enough of an inventive step"). See Utility Model or Patent?, National Board of Patents and Registration of Finland, at: . AS A RESULT, SOME EUROPEAN COUNTRIES AND EVEN CHINA HAS CREATED A NEW 'LESSER' CLASS OF PATENTS KNOWN AS 'UTILITY MODEL PATENTS', WHICH NEED ONLY SATISFY A MINIMAL 'NOVELTY' REQUIREMENT. "Most countries having utility model laws require that the invention be new. However, many patent or utility model offices do not conduct substantive examination and merely grant the utility model after checking that utility model applications comply with formalities." See 'Utility Model', Wikipedia, at: ].

The study concludes that low patenting activity in domestic Indian companies will hurt their global competitiveness in the long run.

It ascribes three reasons for this: (a) lack of awareness among domestic Indian companies, (b) the time taken – often as long as five years – to get a patent granted by the IPO, and (c) the high (US $500 or more) IPO filing fee.

Keeping these factors in mind, the study suggests that India should allow a second category of patents, known as utility model patents, which have a validity of 10 years from their filing date and which can be granted within 6 to 12 months since they are not examined substantively.

Germany, Japan, France, South Korea, Australia and China are some of the countries whose patent offices grant such 10-year patents.

In fact, in China, the filing fee for 10-year patents is only US $70, which is less than one-seventh the cost of the application fee for a 20-year patent; furthermore, the corresponding 10-year patents are granted almost automatically. This has resulted in an enormous increase in the awareness of the patenting system among domestic Chinese companies, and in 2007 alone, these companies filed almost 99 percent of the 181,324 10-year patent applications (filed with the SIPO).

Indian IP Roulette?

A rogues’ gallery

By PK Vasudeva

Financial Express

May 23, 2008

The International Intellectual Property Alliance (IIPA), a coalition of seven trade associations representing some 1900 companies, has expressed concern on the infringement of Intellectual Property Rights (IPR) protection at the global level. According to statistics in an IIPA report, the total loss in 2007 for American Copyrights was around $914 million against $752 million in 2006. The estimated losses for US Copyrights from India in business software area was $732 million in 2007; records and music at $14 million; entertainment at $130 million and books at $30 million.

In view of this, the US government has put India on its ‘Priority Watch List’, along with nine other countries, saying that the country’s failure to protect intellectual property rights (IPR) is putting the health, safety and jobs of its citizens at risk. India has been on this list for a number of years and its continued inclusion does not come as a surprise. Besides India, the US has put countries like China, Russia, Pakistan, Argentina, Chile, Israel, Thailand and Venezuela in the watch list.

Countries on the list will be the subject of close scrutiny during the coming year. In 2007, too, the US administration had put India on its watch list under “section 301” and threatened to impose trade sanctions for violating IPR. Earlier, the Indian government adopted a slew of measures to check violation of IPR, including strong patent laws. The Patent Act, 1970 was amended in 1999, 2002 and then in 2005 to conform to the Trade Related Aspects of Intellectual Property Right (TRIPS) Agreement of the World Trade Organisation (WTO).

The International Intellectual Property Alliance report on global IPR violations also focused on growing problem of internet piracy and counterfeiting of pharmaceuticals and other products that, it claimed, threatened the health and safety of consumers around the world.

Section 301 sanctions have always made countries pay more attention to their intellectual property protection policy as non compliance might lead to trade sanctions but whether such methods adopted by United States is in compliance of WTO norms remains unanswered.

While it continues to be unclear as to how being on this list affects India in any substantial way, because putting the countries in this list means that the US will subject them to extra scrutiny and in the event it decides to pursue complaints before the WTO, then economic sanctions could be imposed on these countries. Quoting the USTR, the report also states that “Priority Watch List countries will be the subject of particularly intense engagement through bilateral discussion during the coming year.”

Being dragged to the WTO might be a more substantial threat to India than the inclusion in the Priority Watch List. The WTO dispute resolution mechanism has, in the past, compelled India to amend its IPR laws [Patent Act 2005]. In the light of the recent discussions pertaining to the Trips compatibility of Section 107A (b), it might indeed be interesting to see the grounds on which the US might choose to file a case before the Dispute Settlement Body (DSB) of the WTO.

The piracy (along with the commercial use of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products) and not Section 107A (b) seems to be the key concern of the USTR at present. Spicy IPR, a well-known weblog on intellectual property issues, has covered the issue of piracy in a number of posts.

A number of intellectual property issues have been thrashed out in considerable detail,
suggesting that policies such as price discrimination and price reduction, as has been practised by Moser Baer in India [ ], might be a better way to curb piracy.