United States Places India on 'Priority Watch List'

Context:

The United States has once again placed India on its "Priority Watch List" in the 2025 Special 301 Report issued by the Office of the U.S. Trade Representative (USTR), citing ongoing concerns over India's intellectual property (IP) rights protection and enforcement mechanisms. India is among eight countries identified as posing significant challenges to American IP stakeholders.

The Special 301 Report is an annual review published by the Office of the U.S. Trade Representative (USTR) assessing the global state of intellectual property rights (IPR) protection and enforcement.

Why has India been placed on the ‘Priority Watch List’?

The U.S. cited inconsistent progress and long-standing IP concerns, including:

Procedural and discretionary issues under the Indian Patents Act (e.g., Section 3(d))
Long patent processing delays and high compliance burdens
Alleged weak IP enforcement mechanisms
High customs duties on IP-intensive imports
Perceived uncertainty in legal interpretation

Key Issues related to IP system in India:

Patentability Concerns: India’s patent laws, particularly Section 3(d) of the Indian Patents Act, 1970, restrict innovation. The clause disallows patents on incremental changes to existing drugs unless they significantly enhance efficacy.
Enforcement Weaknesses: IP enforcement in India is criticized for lacking coordination between national and state authorities, lenient penalties for violations, and the country’s inclusion in the 2024 Notorious Markets List due to rampant piracy and counterfeiting.
Trademark Challenges: The poor trademark examination quality and high levels of counterfeiting. Notably, India is not a signatory to the Singapore Treaty on the Law of Trademarks, a key international framework for trademark harmonization.
Barriers to Foreign Entities: The new Biological Diversity Rules, 2024, require foreign entities to obtain prior approval before claiming IP rights over Indian biological resources, adding complexity for multinational companies.
Other Concerns: These include delays in IP granting, a backlog in applications, and growing issues with online piracy fueled by increasing digitization.

India’s Ongoing Reforms:

The National IPR Policy (2016) aligns with the WTO’s TRIPS Agreement and aims to foster innovation.
Programs like the National Intellectual Property Awareness Mission (NIPAM) and Scheme for Startups Intellectual Property Protection (SIPP) are designed to promote awareness and streamline IP processes.
The Patents (Amendments) Rules, 2024, aim to simplify and speed up patent approvals.
Specialized IP Divisions have been set up in several High Courts, including Calcutta and Himachal Pradesh in 2024, enhancing judicial focus on IP matters.
India has also committed to align with international treaties like the WIPO Performances and Phonograms Treaty and the WIPO Copyright Treaty.

Conclusion:

While India asserts its IP framework is TRIPS-compliant and geared toward public interest, the continued presence on the Priority Watch List reflects persistent tension between domestic policy objectives and international IP expectations. Dialogue between the two nations is likely to continue, balancing innovation, access, and trade relations.