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International Relations May 01, 2026 5 min read Daily brief · #10 of 52

India continues to be on US priority watch list on IPR

The United States Trade Representative (USTR) released the 2026 Special 301 Report on April 30, 2026, retaining India on the Priority Watch List for intellec...

GS Paper 2 and GS Paper 3

What Happened

  • The United States Trade Representative (USTR) released the 2026 Special 301 Report on April 30, 2026, retaining India on the Priority Watch List for intellectual property rights (IPR) concerns — a position India has held for several consecutive years.
  • India was among six countries on the Priority Watch List in 2026, alongside Chile, China, Indonesia, Russia, and Venezuela.
  • Key concerns cited include: long patent approval delays, excessive reporting requirements, prolonged opposition procedures, and restrictions on patentable subject matter — particularly Section 3(d) of the Patents Act, 1970.
  • USTR also flagged high piracy levels (both physical and online) and weak enforcement infrastructure as ongoing concerns.
  • Despite India's 2024 patent rule amendments aimed at improving efficiency, the USTR characterised progress as uneven.
  • The USTR indicated plans for intensive bilateral engagement with Priority Watch List countries in the coming year.

Static Topic Bridges

USTR Special 301 Report: Mechanism and Significance

The Special 301 Report is an annual assessment published by the Office of the United States Trade Representative (USTR) under Section 301 of the US Trade Act of 1974 (amended). It evaluates the adequacy and effectiveness of intellectual property protection and enforcement by US trading partners. Countries are categorised into three tiers: Priority Watch List (most significant concerns), Watch List (moderate concerns), and Priority Foreign Country (most egregious, triggering trade action). The report is a unilateral US instrument — not a WTO-mandated mechanism.

  • Legal basis: Section 301 of the US Trade Act of 1974.
  • Published annually by: Office of the USTR, Washington DC.
  • Priority Watch List: countries with the most significant IPR deficiencies; subject to intensive bilateral engagement.
  • Priority Foreign Country (highest tier): designation triggers a formal investigation and possible trade sanctions under US law.
  • India has been on the Priority Watch List almost continuously since the 1990s.
  • The report is a tool of US trade diplomacy and is often used as leverage in bilateral trade negotiations.

Connection to this news: India's sustained presence on the Priority Watch List reflects the structural tension between India's public health-oriented patent framework and US pharmaceutical industry expectations of stronger IP protection.

TRIPS Agreement and India's Patent Framework

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement is Annex 1C of the WTO Agreement, entering into force on January 1, 1995. It establishes minimum standards for IP protection that all WTO members must meet. India, as a WTO member since 1995, incorporated TRIPS obligations through amendments to the Patents Act, 1970 — most significantly through the 2005 amendment which introduced product patents in pharmaceuticals, food, and chemicals.

  • TRIPS entered into force: January 1, 1995.
  • India's Patents Act 1970 amended in 1999, 2002, and 2005 to achieve TRIPS compliance.
  • The 2005 amendment introduced product patents in pharma and chemicals (previously only process patents were available).
  • TRIPS Article 27.1: patents shall be available for inventions in all fields of technology; allows member countries to define "invention" and patentability criteria.
  • TRIPS flexibilities (confirmed by Doha Declaration 2001): member countries can define patentability criteria and use compulsory licensing to protect public health.

Connection to this news: India's Section 3(d) — the primary US concern — is a TRIPS-permitted flexibility that India designed to prevent evergreening of pharmaceutical patents.

Section 3(d) of the Patents Act, 1970

Section 3(d) of the Patents Act, 1970 (inserted by the 2005 amendment) is India's statutory provision against "evergreening" — the practice of pharmaceutical companies obtaining new patents on minor modifications of existing drugs to extend their monopoly beyond the original 20-year patent term. Section 3(d) bars patenting of new forms (salts, esters, polymorphs, isomers, etc.) of a known substance unless the applicant demonstrates significantly enhanced efficacy over the known substance.

  • Section 3(d) was upheld by the Supreme Court of India in the landmark Novartis AG vs. Union of India (2013) case — the court ruled that Novartis's cancer drug Glivec (imatinib mesylate) did not meet the Section 3(d) efficacy standard.
  • This judgment affirmed India's right under TRIPS to use a stringent patentability standard to protect public health.
  • Section 3(d) has become a global reference point for developing nations designing patent laws that balance innovation incentives with access to medicines.
  • The US pharmaceutical industry views Section 3(d) as an unjustified restriction; India views it as a legitimate exercise of TRIPS flexibilities.
  • Doha Declaration on TRIPS and Public Health (2001): affirmed WTO members' right to use TRIPS flexibilities, including compulsory licensing, to protect public health.

Connection to this news: The USTR's 2026 report specifically targets "restrictions on patentable subject matter" — a direct reference to Section 3(d) — as a barrier for US pharmaceutical companies seeking patent protection in India.

India's Compulsory Licensing Framework

Compulsory licensing (CL) under the Patents Act allows the government to authorise a third party to manufacture a patented product without the patent holder's consent, typically to ensure affordable access to medicines. India invoked compulsory licensing for the first time in 2012 (Natco Pharma vs. Bayer Corporation — cancer drug Nexavar/sorafenib). This was another landmark in India's assertion of TRIPS flexibilities.

  • Legal basis: Sections 84-92 of the Patents Act, 1970.
  • Section 84: any person can apply for CL after 3 years of patent grant if: drug is not available at reasonably affordable price, or not manufactured in India to adequate extent.
  • Section 92: government can issue CL in national emergency or extreme urgency.
  • First CL granted in India: 2012 (Natco vs. Bayer, sorafenib/Nexavar).
  • TRIPS Article 31 and Doha Declaration: permit CL with conditions (adequate remuneration to patent holder, primarily domestic market supply).

Connection to this news: The broader US IPR concerns extend beyond Section 3(d) to India's entire pro-public health patent ecosystem, including compulsory licensing provisions, which limit US pharmaceutical companies' pricing power in the Indian market.

Key Facts & Data

  • USTR 2026 Special 301 Report released: April 30, 2026
  • India's tier: Priority Watch List (retained, not upgraded to Priority Foreign Country)
  • Other Priority Watch List countries 2026: Chile, China, Indonesia, Russia, Venezuela
  • Legal basis of Special 301: Section 301, US Trade Act of 1974
  • TRIPS entered into force: January 1, 1995
  • India's Patents Act 1970 major amendment for TRIPS: 2005 (product patents in pharma/chemicals)
  • Supreme Court Section 3(d) ruling: Novartis AG vs. Union of India, 2013
  • First compulsory licence in India: 2012 (Natco Pharma vs. Bayer, sorafenib)
  • Doha Declaration on TRIPS and Public Health: 2001
  • Patent term under TRIPS: 20 years from filing date
On this page
  1. What Happened
  2. Static Topic Bridges
  3. USTR Special 301 Report: Mechanism and Significance
  4. TRIPS Agreement and India's Patent Framework
  5. Section 3(d) of the Patents Act, 1970
  6. India's Compulsory Licensing Framework
  7. Key Facts & Data
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