Firm-level trade responses to intellectual property reforms: Evidence from India

Qayoom Khachoo (), Ridwan Ah Sheikh () and Pritam Banerjee ()
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Qayoom Khachoo: Indian Institute of Foreign Trade
Ridwan Ah Sheikh: Indira Gandhi Institute of Development Research
Pritam Banerjee: Indian Institute of Foreign Trade

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: This study leverages India's Patents (Amendment) Act, 2002, as a quasi-natural experiment within a difference-in-differences framework to examine how domestic reforms related to patents may affect firms' export behavior and their integration to the global value chains. Exploiting a detailed firm-level database covering the universe of Indian manufacturing firms, we find that heightened patent protection is associated with approximately a 18 increase in exports and a 12 increase in total imports among high-tech firms relative to low-tech firms, even including firm, year, and industry-by-year fixed effects. We further show that stronger enforcement of intellectual property rights (IPRs) has a positive impact on firms' imports of intermediate inputs. Specifically, high-tech firms experienced 20 increase in raw-material imports relative to their low-tech counterparts. In contrast, the reform was associated with a significant reduction in imports of spares and stores. While the average treatment effects on capital and final goods imports remain insignificant, event-study estimates suggest positive and statistically significant effects, albeit with a delay. This study provides policy-relevant evidence that stronger IPRs in emerging market economies such as India enhance firms' trade performance by stimulating innovation, promoting technology transfer and adoption, and enabling access to advanced global inputs.

Keywords: IPRs; Exports; Imports; Global value chains; Difference-in-Differences (search for similar items in EconPapers)
JEL-codes: F13 F14 O30 O33 O34 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-03
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