The US has said that India remains one of the world’s most challenging major economies with respect to protection and enforcement of intellectual property (IP), listing it among six countries on priority watch list in the latest edition of Special 301 report.

The primary purpose of the Special 301 Report under the Trade Act is to identify and pressure foreign countries to improve their laws and enforcement regarding Intellectual Property (IP) rights. However, in cases where a country is classified as a priority foreign country, mandatory investigation, sanctions and high tariffs can follow.  India has remained on the priority watchlist of the report since the 1990s and as both countries are negotiating a trade agreement IP issues are figuring prominently in discussions.

The India chapter of the report has singled out IP and patent laws in pharma for review, suggesting changes in them to make it easier for American businesses. Delay in issue of patents, excessive reporting requirements, and frequent and protracted pre-grant opposition procedures have been flagged. Another issue that remains is ‘compulsory licenses’ in pharma. “The US encourages India to continue moving forward with reform efforts to reduce patent pendency times and improve the patent system for all users,” the report said.

“Overall, while the US cites weak IP protection, India’s position is that it is fully WTO-compliant and that the real difference lies in its refusal to adopt stricter, TRIPS (Trade Related Aspects of Intellectual Property Rights)-plus standards,” founder of GTRI Ajay Srivastava said.

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 despite justifying limiting IP protections as a way to promote access to technologies.

The report has also flagged insufficient legal means to protect trade secrets in India, an issue that has been flagged by many companies. Though the government has considered on various occasions to have a separate law for it and it remains work in progress.

Another issue raised by the report is trademark counterfeiting. Counterfeit goods, including semiconductors and other electronics, chemicals, medicines, automotive and aircraft parts, food and beverages, household consumer products, personal care products, apparel and footwear, toys, and sporting goods, make their way from China and other source countries, such as India, South Korea, and Türkiye, directly to purchasers around the world. 

“The US is particularly concerned with the proliferation of counterfeit pharmaceuticals that are manufactured, sold, and distributed by numerous trading partners. The top countries of origin for counterfeit pharmaceuticals seized at the U.S. border in Fiscal Year 2025 were India, China, including Hong Kong, the United Arab Emirates, and the Dominican Republic,” the report  said. 

Unauthorized file sharing of video games, signal theft by cable operators, commercial-scale photocopying and unauthorized reprints of academic books, online piracy and broadcast piracy is another issue. The report also points to the Illicit Internet Protocol television (IPTV) services unlawfully retransmit telecommunications signals and channels containing copyrighted content through dedicated web portals and third-party applications