This was decided at a high-level meeting called by Cabinet Secretary Ajit Seth to discuss problems related to IPR issues with the US, especially in the pharmaceutical sector.
"Indian IPR laws are fully compliant with WTO and other international norms. Any unilateral action taken by the US will be violative of WTO and India will suitably respond by dragging the US to WTO's dispute resolution mechanism," sources told PTI.
US industry, particularly the pharmaceuticals sector, and trade lobbies have been putting pressure on their government to place India under the Priority Foreign Country list for IPR.
Under the US Trade Act, a Priority Foreign Country is the worst classification given to those that deny adequate and effective protection of IPR or fair and equitable market access to US entities relying on IPR protection.
The US Trade Representative is scheduled to come out with a report on April 30 on Special 301, which also talks about the priority foreign country list.
"We are waiting for that report. The Indian government will not engage with private American firms," they added.
Indian Ambassador to US S Jaishankar had suggested that the government should engage with US pharma firms on the matter. US companies allege India's IPR regime is not compliant with international norms and discriminates against them.
Officials at the meeting, including Foreign Secretary Sujatha Singh, Commerce Secretary Rajeev Kher, DIPP Secretary Amitabh Kant and Health Secretary Lov Kumar Verma, appraised the Cabinet Secretary on all IPR-related issues between India and the US.
According to sources, as part of trade sanctions, the US may consider withdrawing benefits under the scheme of Generalised System of Preferences (GSP), which provides reduced tariffs for Indian goods entering the US markets.
"The withdrawal of GSP benefits may impact exports of MSME sector to the US. However, overall, the move would not impact Indian exporters much," they said.
Officials have said the demand is completely unfair as India's IPR regime is compliant with global laws, including the World Trade Organisation (WTO).