India is on the ‘priority watch list’ of the US in the latest Special 301 Report for 2026, released on April 30, due to persistent differences over intellectual property (IP) rules, especially in the pharmaceutical sector. India has remained on the priority watch list since the 1990s, reflecting long-standing divergences over patent standards and access to medicines.
According to the latest Special 301 Report, India is one of six countries on this list due to ongoing concerns regarding the protection and enforcement of IP rights, especially in the pharmaceutical and digital sectors.
The US Trade Representative (USTR) flagged inconsistent progress in India’s IP regime, noting steps such as the Patents (Amendment) Rules, 2024 and increased staffing at the patent office. “There continues to be a lack of progress on many long-standing IP concerns raised in prior Special 301 Reports. India remains one of the world’s most challenging major economies with respect to the protection and enforcement of IP,” stated the report.
Section 3(d) of India’s Patents Act prohibits patenting new forms of known substances unless they demonstrate significantly enhanced therapeutic efficacy. It prevents evergreening, where companies extend patent terms for minor modifications. According to the USTR, such provisions create uncertainty for innovators. Although, India’s stance is fully compliant with WTO norms.
Flagging the absence of data exclusivity provisions, the US also criticised India’s compulsory licensing framework, which allows third parties to produce patented drugs under public interest conditions. The report also noted that India is one of the top countries of origin for counterfeit pharmaceuticals seized at the US border in Fiscal Year 2025 and is also a leading source of counterfeit medicines distributed globally.
The US also flagged high customs duties on IP-intensive products—including information and communications technology (ICT), solar gear, medical devices, pharmaceuticals and capital goods—as a sustained concern. It also questioned whether India has any mechanism in place to prevent unfair commercial use or disclosure of proprietary test data submitted for regulatory approvals in pharmaceuticals and agro-chemicals.
Ambassador Jamieson Greer said “We have rigorously reviewed our trading partners' IP practices and expect to take action where needed to protect American innovators and creators globally."
Beyond pharmaceuticals, the USTR flagged gaps in enforcement, including piracy, and weak coordination among agencies, alongside concerns over trade secrets protection, price controls, and high tariffs on IP-intensive goods. Citing other studies, the report stated, “Stakeholders report that unauthorized camcords originating from India continue to be a concern.”