Intellectual Property and the Future of India–US Trade

Posted On - 14 February, 2026 • By - Himanshu Deora

Introduction

Trade has been an intrinsic component of human civilisation since antiquity. As mankind evolved, so too did the methods of conducting trade. Trade has always impacted the way cultures, societies, economies, and governments operate on a global escalator; these structural developments continue today. Trade originally started out as direct exchange of goods and evolved over time to allow for credit-based transactions, thereby greatly increasing the volume of trade.

Barter-type trade systems provided great limitations, both in terms of operational efficiency and in terms of the limitations involved with the requirement of matching goods that each trader wanted to trade. The changing dynamics of political, social, and economic control created many new systems of trading throughout history, all challenges to the scales of currency conversion.

During the final decade of the 20th Century, we witnessed yet another major change in international economic and trade systems, following the dissolution of the USSR and the rise of the US as the only remaining world superpower and the emergence of a unipolar World Order of a “Free Market Economy” and the overall implementation of Government / Economy Liberalisation policies.

The founding of the World Trade Organisation (WTO) in 1994 greatly contributed to increased trade liberality by removing trade restrictions and promoting Rules based on International Trade.

Even with the recent change to a multi-polar World Order and the rise of many Emerging Economies in the Global South, the importance of the United States and its continued leadership role in Global Trade is unchanged.

The United States and India have maintained a strong trading relationship for decades; the continued existence of these two economies’ trading partnership will ultimately have very important effects on India’s economy, its geopolitical position, and on the stability of India’s domestic society.

Over time, however, the India–US trade relationship has suffered through multiple disputes related to the protection of intellectual property rights (IPR). While the United States has accused India of providing insufficient protections to the IPR of US-based corporations, India maintains its view that it provides sufficient IPR protection as required by the rules established by the WTO. The issue of IPR protection between the United States and India has been at the centre of the India-US trade relationship in recent years.

What Role Does Intellectual Property Play in Trade Relations Worldwide?

The importance of IPR in globally traded goods and services is apparent when evaluating the effects that occur without it. Trade involves the movement of goods and services across international borders, and many of those imports and exports represent large amounts of money used to invest in R&D and create new technology and products. When a company imports a new technology or product it has created through R&D efforts into another country, it has not incurred the investment cost of developing that product itself, and so could potentially be able to sell it for a lower price than the company that created it in its original country; this could create an unjust competitive situation for that company and discourage additional innovation from that country’s-based companies. This situation is often referred to as the “first mover disadvantage.”

Strong protection provides security to innovators by providing them with a fair return on their investments, and patenting not only protects the right of an inventor to receive fair compensation for his or her invention but also provides the means by which innovators can be rewarded for their continuous creativity. The second important principle is that of non-discrimination, or the principle that imported products should be afforded the same level of IP protection as domestic products. If there is no way to obtain such protection, then authors, inventors and businesses from exporting countries will suffer from economic loss resulting from the theft of their ideas or products by counterfeiters. Therefore, for a fair and equitable global economic system to continue to exist and encourage continued innovation, it is critical that effective IPR protection is in place.

Movement of Intellectual Property from Ideas to Agreements to Trade

While developing the connection between intellectual property and international trade was not accomplished in one single act, it was the result of many international treaties and agreements over the years. The Paris Convention in the late 1800’s was one of the initial treaties to recognise the necessity of a system to protect industrial property. Additionally, the Paris Convention established the premise of providing the same level of protection to an IP owner no matter where the IP was located. Additionally, the Berne Convention created the basis for protecting copyright in literary and artistic works.

The drive to include Intellectual Property Rights (IPR) in international trade was powered by advanced nations, principally the United States, with the intention of utilizing global market rates for innovative and research and development (R&D) investment. Developing countries like India had initial concerns about IPR due to the increased burdens associated with IPR being placed on an economy still under recovery from colonial-era exploitation. Advances in IPR were conceived and negotiated during the Uruguay Round of negotiations held under GATT, resulting in the TRIPS Agreement (Agreement on Trade Related Aspects of IPRs).

The TRIPS Agreement created minimum standards for IPR protection and enforcement and created new types of intangible rights. It also created a means of resolving disputes as a result of conflicting IPR rights. Additionally, TRIPS recognized the unique needs of developing and least-developed nations through transition periods and the availability of technological and financial assistance.

India–US Trade Disputes over Intellectual Property: The Special 301 Report1

Despite growing bilateral trade, India and the United States remain divided over IP protection standards. The United States Trade Representative (USTR) annually publishes the Special 301 Report, assessing global IP protection and enforcement. Since 1989, India has consistently been placed on the Priority Watch List, including in the 2025 report, with the USTR characterising India as one of the most challenging economies for IP protection.

As a result, this designation decreases the confidence of investors in American companies, increasing American companies’ fears of IP theft and counterfeiting in India. Critics of the Special 301 process also state that, through the process, the U.S. acts as a unilateral pressure point, ignoring the growth and developmental requirements of countries like India. In response, India has repeatedly expressed its concerns regarding the “naming and shaming” (placement) methods of the U.S. in conjunction with its claims of compliance with TRIPS, but not with U.S.-specific compliance.

Patents, Pills, and Profits: Fault Lines in the India–US IP Dispute

The India–US IP discourse continues to be dominated by several recurring issues. One of the most contentious aspects of this relationship is Section 3(d) of the Indian Patents Act of 1970, which prohibits the evergreening of a patent unless enhanced therapeutic efficacy is shown to exist for that product. This provision, which was further reinforced by the Novartis judgment, restricts pharmaceutical companies from extending patent monopolies on the products they manufacture simply by modifying the product slightly; thus, the United States claims that this prohibition will stifle innovation and restrict commercialization, while India argues that this prohibition ensures that patients will be able to access drugs at affordable prices when they need them most.2

The issue of compulsory licensing is another area of contention. Compulsory licensing is an option permitted under the Doha Declaration on TRIPS and Public Health that allows for third-party production of patented products when a public health emergency exists. The case of Bayer v. Natco was historic in that it was the first case in which India issued a compulsory license. To date, no American pharmaceutical company has been affected by a compulsory license in India, but the United States remains concerned by the absence of an articulated or consistent process for issuing compulsory licenses.3

The absence of a dedicated trade secrets law in India further complicates matters. Unlike the United States, India relies primarily on contractual remedies, lacks a statutory definition of trade secrets, and does not recognise the inevitable disclosure doctrine. This divergence fuels U.S. demands for stronger legislative safeguards.

Enforcement of registered trademarks can be problematic. The lengthy time frames involved in registering trademarks and opposing trademark applications promote the dilution of brands and the proliferation of counterfeit goods. A number of cases involving disputes between companies in the United States and those in India highlight the inefficiencies associated with these systems, and the U.S. Trade Representative (USTR)4 has urged India to recognize and implement international standards of trademark law, such as those found in the Singapore Treaty on Trademark Law.

Bilateral Trade Dynamics and Impact of IP Disputes

The existence of IP disputes between the two countries has a significant effect on their bilateral trade dynamics. The United States has accused India of adopting inconsistent approaches towards enforcement of its intellectual property rights, especially regarding counterfeit products in the pharmaceutical and agricultural chemical sectors. Conversely, India asserts that its IP system is consistent with international norms. If these tensions cannot be resolved to allow both countries to balance the need to protect U.S. business interests while simultaneously not impeding India’s development goals, the two countries will not be able to expand their trade relationship.

India has undertaken several reforms, including the enactment of the Cinematograph (Amendment) Act, 2023 that established stronger anti-piracy protections for copyright. The introduction of the Patent(amendment) Rules,5 2024, therefore introduced a more equitable inventor-friendly patent regulatory regime as evidenced by its endorsement by the United States Trade Representative (USTR). Trade Representative. The establishment of the Cell for IPR Promotion and Management (CIPAM) supports India’s commitment to develop the public and private sectors’ awareness and enforcement capabilities concerning the IP rights of all business entities in the country.

Conclusion

By interlinking and reinforcing both intellectual property protection with trade initiatives, and working collaboratively through mutual accommodation, India and the United States will continually decrease their differences regarding their respective historically divergent levels of support and protection for the enforcement of IP rights. Finding a more equitable and practical approach that will both promote continued innovation and protect public interest concerns will, ultimately serve to both resolve continuing tensions between India and the United States, but also create the framework on which the future of all trade relations between India and the United States will develop.

  1. https://ustr.gov/countries-regions/south-central-asia/india ↩︎
  2. The Indian Patents Act, 1970, § 3(d), No. 39, Acts of Parliament, 1970 (India) ↩︎
  3. https://www.thehindu.com/business/us-again-puts-india-on-priority-watch-list-for-alleged-ip-rightsviolations/article69506336.ece#:~:text=It%20added%20that%20India%20maintains,Act%2C%20and%20pharmaceutical%20patent%20disputes. ↩︎
  4. https://ustr.gov/sites/default/files/2015-Special-301-Report-FINAL.pdf ↩︎
  5. The Cinematograph (Amendment) Act, 2023, § 6AA, NO. 12, Acts of Parliament, 2023 (India) ↩︎