New Delhi: The United States has once again included India on its “Priority Watch List” in the 2025 Special 301 Report, released by the United States Trade Representative (USTR) on April 29, 2025. This annual report evaluates the state of intellectual property rights (IPR) protection and enforcement in over 100 trading partners, identifying nations that fall short of US expectations. India joins seven other countries—Mexico, China, Chile, Argentina, Indonesia, Russia, and Venezuela—on the Priority Watch List, while 18 additional countries, including Vietnam, Brazil, and Pakistan, are placed on a secondary watch list. The report cites persistent issues in India’s IP ecosystem, particularly patent-related challenges, weak enforcement, and rampant online piracy, labeling India as one of the world’s most challenging major economies for IP protection.
Understanding the Special 301 Report
The Special 301 Report is an annual review mandated by Section 182 of the Trade Act of 1974, which authorizes the US to address unfair trade practices that burden American commerce, including inadequate IPR protection. Conducted by the USTR, the report involves extensive research and stakeholder engagement to assess global IP practices. Countries failing to meet US standards may face consequences such as tariffs, trade investigations, or retaliatory measures. In 2025, the report highlights deficiencies in IP protection and enforcement across multiple nations, with India receiving particular scrutiny.
Reasons for India’s Inclusion on the Priority Watch List
The 2025 Special 301 Report retains India on the Priority Watch List due to ongoing concerns about its IP framework, with patent issues being a primary focus. The report criticizes the “potential threat of patent revocations” and the “procedural and discretionary invocation of patentability criteria” under the Indian Patents Act, 1970. Section 3(d) of the Act, which considers the mere discovery of a new form of a known substance non-patentable unless it enhances efficacy, is singled out as a significant barrier. This provision affects companies across various sectors, creating uncertainty for patent holders.
Additionally, patent applicants in India face long waiting periods for patent grants and excessive reporting requirements, which hinder the IP registration process. Stakeholders have raised concerns about the vague interpretation of the Indian Patents Act, further complicating efforts to secure IP rights. The report also notes India’s high customs duties on IP-intensive products, including information and communications technology, solar energy equipment, medical devices, pharmaceuticals, and capital goods, as a deterrent to innovation and trade.
Weak IP Enforcement and Piracy Challenges
Beyond patent issues, the USTR report highlights deficiencies in India’s IP enforcement mechanisms. Weak law enforcement, lack of collaboration between national and state agencies, and lenient penalties for IP violations contribute to an ineffective enforcement ecosystem. India’s inclusion in the 2024 Notorious Markets List underscores its status as a hub for piracy and counterfeiting. The report also flags high levels of online piracy, fueled by digitization, as a growing concern. Notably, India is identified as a top source of counterfeit pharmaceuticals seized at the US border in 2024, alongside China, Hong Kong, the United Arab Emirates, and Singapore.
Trademark and Counterfeiting Issues
Trademark-related challenges further exacerbate India’s IP struggles. The report points to high levels of counterfeiting and poor examination quality for trademarks, which undermine brand protection efforts. India’s absence from the Singapore Treaty on the Law of Trademarks is noted as a gap in its alignment with global IP standards. These issues erode confidence among businesses seeking to safeguard their trademarks in the Indian market.
New Regulatory Burdens for Foreign Entities
The Biological Diversity Rules, 2024, introduce additional complexities for foreign entities seeking IP protection for Indian biological resources. These rules require approval from Indian authorities, adding procedural hurdles to the IP registration process. Combined with delays in IPR granting and a backlog of applications, these regulations pose significant challenges for international stakeholders.
India’s Initiatives to Strengthen IP Protection
Despite the criticisms, the USTR report acknowledges India’s efforts to improve its IP ecosystem. The National Intellectual Property Rights (IPR) Policy, 2016, aligns with the World Trade Organization’s (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, providing a framework for comprehensive IP reforms. The National Intellectual Property Awareness Mission (NIPAM) and the Scheme for Startups Intellectual Property Protection (SIPP) aim to raise public awareness and support innovation among startups.
The Patents (Amendments) Rules, 2024, have streamlined patent registration and approval processes, addressing issues with pre-grant opposition proceedings and reporting requirements. The establishment of Intellectual Property Divisions in the Calcutta and Himachal Pradesh High Courts in 2024, alongside existing divisions in Delhi and Madras, reflects India’s commitment to specialized IP adjudication. India has also expressed its intent to align with the WIPO Performances and Phonograms Treaty and Copyright Treaty, signaling adherence to global IP standards.
The IP Saarthi chatbot, designed to assist with IP-related queries, enhances accessibility and education. These initiatives demonstrate India’s proactive engagement with the US through platforms like the Trade Policy Forum’s Intellectual Property Working Group, fostering dialogue on IP issues.
India’s Response to the Special 301 Report
India has consistently maintained that its IPR regime complies with global trade norms, particularly the WTO’s TRIPS Agreement. Indian officials view the Special 301 Report as a unilateral measure by the US to pressure countries into adopting stricter IP protections beyond TRIPS requirements. A trade expert cited in the report emphasized that India has a well-established legislative, administrative, and judicial framework to safeguard IPR, fulfilling its international obligations. This stance highlights the divergence between US expectations and India’s approach to IP policy.
US-India Trade Dynamics
The 2025 Special 301 Report comes at a critical juncture as India and the US negotiate a bilateral trade agreement aimed at increasing two-way commerce to $500 billion by 2030. The US seeks to address its $41.18 billion trade deficit with India through this pact. The report’s findings add complexity to these discussions, particularly following US President Donald Trump’s recent announcement of tariffs on imports, which were paused for 90 days. USTR Jamieson Greer has stressed the importance of trading partners addressing IP theft affecting American businesses, underscoring the report’s significance in bilateral trade talks.
Global Context and Other Listed Countries
India is not alone on the Priority Watch List, as China, Russia, Indonesia, Argentina, Chile, Mexico, and Venezuela face similar scrutiny for IP deficiencies. The report also places 25 countries, including Pakistan, Turkey, and Brazil, on a secondary watch list, reflecting widespread global challenges in IP protection. The USTR’s findings are heavily influenced by inputs from American industries, which shape the report’s perspective on foreign IP regimes.
Conclusion
India’s inclusion on the US Priority Watch List in 2025 highlights persistent challenges in its IP ecosystem, including patent disputes, weak enforcement, online piracy, and counterfeiting. While India has implemented significant reforms, such as the National IPR Policy and Patents (Amendments) Rules, the USTR report underscores areas needing further progress. As India navigates its trade relationship with the US, addressing these IP concerns will be crucial for fostering innovation, protecting global brands, and achieving ambitious trade goals. The ongoing dialogue between the two nations offers an opportunity to bridge gaps and align India’s IP framework with international expectations.
Frequently Asked Questions (FAQs)
1. What is the US Special 301 Report, and why does it matter for India?
The Special 301 Report is an annual review by the United States Trade Representative (USTR) that evaluates intellectual property rights (IPR) protection and enforcement in over 100 trading partners. Conducted under Section 182 of the Trade Act of 1974, it identifies countries with inadequate IP practices, potentially leading to US actions like tariffs or trade investigations. India’s inclusion on the Priority Watch List in 2025 highlights concerns about its IP ecosystem, impacting US-India trade negotiations and India’s global reputation for innovation.
2. Why was India placed on the Priority Watch List in 2025?
India was retained on the Priority Watch List due to ongoing issues in its IP framework, including patent-related challenges, weak enforcement, and high levels of online piracy. The USTR report criticizes the discretionary use of patentability criteria under Section 3(d) of the Indian Patents Act, long delays in patent grants, excessive reporting requirements, and inadequate penalties for IP violations. India’s role as a hub for counterfeiting and piracy, as noted in the 2024 Notorious Markets List, further justifies its listing.
3. What specific IP issues does the US highlight in India?
Patent Challenges: Potential patent revocations, vague interpretation of the Indian Patents Act, and restrictive criteria under Section 3(d).
- Weak Enforcement: Poor collaboration between law enforcement agencies and lenient penalties for IP violations.
- Piracy and Counterfeiting: High levels of online piracy and India’s status as a source of counterfeit pharmaceuticals seized at the US border.
- Trademark Issues: High counterfeiting rates and poor trademark examination quality.
Regulatory Burdens: The Biological Diversity Rules, 2024, requiring foreign entities to seek approval for IP protection on Indian biological resources.
4. What steps has India taken to address IP concerns?
India has implemented several initiatives to strengthen its IP ecosystem:
The IP Saarthi chatbot assists with IP queries, and India is committed to aligning with WIPO treaties.
The National Intellectual Property Rights (IPR) Policy, 2016, aligns with the WTO’s TRIPS Agreement.
- The National Intellectual Property Awareness Mission (NIPAM) and Scheme for Startups Intellectual Property Protection (SIPP) promote IP awareness and innovation.
- The Patents (Amendments) Rules, 2024, streamline patent registration processes.
- Intellectual Property Divisions in Calcutta, Himachal Pradesh, Delhi, and Madras High Courts enhance IP adjudication.
5. How does India’s inclusion on the Priority Watch List affect US-India trade relations?
India’s listing complicates ongoing US-India negotiations for a bilateral trade agreement targeting $500 billion in two-way commerce by 2030. The US aims to reduce its $41.18 billion trade deficit with India, and IP concerns could influence tariff policies or trade terms. India maintains that its IPR regime complies with global norms, viewing the report as a unilateral US measure. Continued engagement through the Trade Policy Forum’s Intellectual Property Working Group offers a path to address these issues and strengthen bilateral ties.
