The US placed India once again on the “priority watch list” of countries for alleged deficiencies in its intellectual property (IP) protection and enforcement in the latest USTR Special 301 report on IP review with five others including China and Russia.

The report, shared by the US Trade Representative (USTR) office on Thursday, noted that among other concerns the potential threat of patent revocations and the procedural and discretionary invocation of patentability criteria under the Indian Patents Act impact companies across different sectors, especially pharmaceuticals.

“Despite India’s justifications of limiting IP protections as a way to promote access to technologies, India maintains high customs duties directed to IP-intensive products such as information and communications technology (ICT) products, solar energy equipment, medical devices, pharmaceuticals, and capital goods,” the report said.

India, while still on the priority watch list, remains in a category that emphasises ongoing bilateral engagement rather than immediate trade sanctions. Other countries classified as priority watch are China, Russia, Chile, Venezuela and Indonesia, while Vietnam was identified as a priority foreign country, the most serious classification under the framework. It leads to special investigations and possible trade action.

“The US intends to continue to engage with India on IP matters, including through US-India Bilateral Trade Agreement negotiations and the TPF’s Intellectual Property Working Group,” it said.

The report acknowledged that India had made some meaningful progress in 2024 to promote IP protection and enforcement in some areas and took steps to partially address long-standing issues by notifying the Patents (Amendment) Rules, 2024, including provisions that are likely to increase the efficiency of the patent regime and reduce current burdens on patent applicants. However, patent issues continue to be of particular concern in India, it said.

In the pharmaceutical sector, the US continues to monitor the restriction on patent-eligible subject matter in Section 3(d) of the Indian Patents Act and its impacts, the report noted.

The US has long been seeking the revocation or dilution of Section 3(d) that sets a higher bar for patenting “incremental innovations”  designed to prevent a practice known as evergreening, where pharmaceutical companies extend their patent monopolies by making minor, cosmetic changes to existing drugs.

“Pharmaceutical stakeholders also express concerns as to whether India has an effective mechanism for the early resolution of potential pharmaceutical patent disputes. In particular, India does not have a system to provide notice to a patent holder or to allow for a patent holder to be notified prior to the marketing of a follow-on product, which limits transparency,” the report said.

On trade secret protection, the report stated that US and Indian companies had identified it as a growing concern and supported adoption of trade secret legislation that comprehensively addresses these concerns. “One particular issue highlighted by stakeholders is the requirement for companies to disclose their source code for telecom equipment undergoing required certification and security testing at designated Indian facilities,” it said.

Published on May 1, 2026