Summary
The US Trade Representative has initiated an Out of Cycle Review to assess India's intellectual property enforcement, citing high rates of online piracy and counterfeit pharmaceuticals. India has criticised the process as unilateral and not consistent with WTO norms, refusing to participate. Indian authorities argue that domestic IP policy serves public interest, especially in healthcare, and that certain legal provisions are protective rather than restrictive. The review occurs amid the Make in India campaign and ongoing bilateral IP discussions. The outcome could influence foreign investment and perceptions of India's ability to protect innovation and manufacturing.
The United States Trade Representative (USTR) ordered an Out of Cycle Review (OCR) for India in October 2014. While the USTR characterised the exercise as providing constructive feedback to improve India’s intellectual property protection and enforcement, the move drew criticism from the Indian government and the broader IP community. The Indian government refused to participate in the review, arguing that US laws are not applicable to India. Nirmala Sitharaman, India’s Commerce Minister, informed Parliament:
“The Special 301 process is a unilateral measure taken by the United States under their Trade Act, 1974 to create pressure on countries to increase Intellectual Property Rights (IPR) protection beyond the TRIPS Agreement. It is an extra territorial application of the domestic law of a country and is not tenable under the overall WTO regime.”
As a result, the review was conducted solely on the basis of representations from US stakeholders.
USTR’s Principal Concerns
The USTR claimed that India is home to perhaps the highest rate of online video piracy in the world, estimated at approximately 50% of video piracy across the entire Asia-Pacific region. The USTR also alleged that India is the largest source of counterfeit pharmaceuticals for the United States, with up to 40% of drugs sold in Indian markets being fake. India was accordingly placed on the “Priority Watch List” along with several other Asian nations. A further downgrade to “Priority Foreign Country” status would expose India to the risk of unilateral trade sanctions by the United States.
Make in India and the IP Working Group
The OCR arose in the broader context of the Make in India campaign and Prime Minister Narendra Modi’s visit to the United States, following which the leaders of the two countries established a bilateral Intellectual Property Working Group. In a submission to the USTR, the Federation of Indian Chambers of Commerce and Industry (FICCI) argued that Indian IP policy is driven by public interest and healthcare considerations, and that the provisions on Compulsory Licensing and Section 3 of the Patent Act should be viewed as protective rather than restrictive. These are precisely the provisions that have been a source of contention for foreign manufacturers operating in the Indian market.
Implications for Trade Relations
While the OCR may not have an immediate significant impact on trade relations between the United States and India, its outcome could affect the Make in India initiative. Investment in manufacturing and research and development hubs requires confidence that the host country can guarantee adequate protection for the resulting intellectual property.
Disclaimer
This article is for general information and does not constitute legal advice. Readers should consult a qualified attorney before acting on any matter discussed here.