Tax breaks do not create genius, freedom does.

A well reasoned article asks if tax breaks are really necessary for Indian companies to invest in research, or not. Indian business leaders plead for cuts in taxes based on " misinformation and alarmist propaganda ". Earlier India did not protect product patent but only the patent on process, so pharma companies copied new drugs by a different process, to sell at cheap rates in India. So, they did research on copying but not on discovering new drugs. Why? Because it takes a lot of money to discover a new molecule and years of trials before they can be licensed for sale to the public and even then, there is a danger of lawsuits in case of side effects. It is much safer to cheat on a drug that has already gone through the process and has been licensed in other countries. In some ways it is good to delay the introduction of a new drug, as was dramatically shown by the Thalidomide disaster in the sixties which we largely avoided. Today Thalidomide is used under strict supervision in reactions to treatment in leprosy, which is sadly still a scourge in India. The author suggests that R&D can only come from competition as firms are forced to innovate or become irrelevant. Companies which adopt new technology, like Google, Amazon or Uber will create massive disruptions in the market and those that are unable to adapt will disappear. Most research in the US takes place in universities with funding from private companies, philanthropists and some from the government. In India politicians and civil servants keep a tight control of all funding and scholarships for further study abroad are available only to their children. Our best science students migrate abroad on scholarships from foreign universities so their inventions, such as the USB port and the Pentium Chip, benefit foreign companies. Indian companies cry for tax breaks partly because other countries give tax breaks to attract multinationals, partly because decades of socialism has created a culture of crony capitalism, which favors some while excluding others, and partly because all companies will try to pay as little tax as possible. US companies are stashing over $2 trillion overseas to avoid paying taxes in the US and the recent takeover by Pfizer of Allergan for an eye-watering $155 has given rise to accusations of 'inversion', because Allergan is based in Ireland. Perhaps the biggest reason for the lack of research in India is that our laws are unstable. Special Economic Zones were set up with great fanfare, where companies would get tax breaks to set up manufacturing, but when the Congress needed money for social schemes to win elections they suddenly imposed a Minimum Alternative Tax. The government does not need to encourage, the government needs to disappear.