India, EU reach settlement on drug dispute

India and EU have reached an "interim settlement" under which none of its 27 members will detain Indian generic medicines transiting through Europe on suspicion of intellectual property right (IPR) violations.

"Finally EU has come around and we have agreed on an interim settlement...Which means EU will not make any detention within its territory of pharmaceutical products coming from India [and going to other destinations]," Additional Secretary in the Commerce Ministry Rajiv Kher told reporters here today.

However, New Delhi will not withdraw its case against EU in the World Trade Organisation (WTO) filed in May 2010, which was triggered by repeated detentions and seizures of Indian pharmaceutical products at EU ports particularly in the Netherlands.

About 17 detentions took place between October-December 2008 at Schiphol Airport at Amsterdam. These consignments, destined for Latin American countries, were initially detained and later destroyed or returned to India.

Kher said that as per the bilateral understanding, EU would not only stop such detentions but also amend its regulation under which its member countries resorted to such an action.

"They [EU] will issue interim guidelines to their customs and all member countries advising them how to take the core principles of our understanding into the EU legislation," he said.

He said that India's options to revive the dispute at WTO remain intact, unless the EU abides by these core principles.

He said EU Parliament was expected to take about 12-18 months to amend the legislation and then India would examine that law. "We will finally withdraw the dispute only after getting convinced".

Kher said while the draft amendment had already been prepared by EU, India had some reservations. However, those reservations have no material impact on the resolution of the present dispute, he said without elaborating.

Latin America is one the biggest markets for Indian generic drugs.

Indian pharmaceutical exports total about $10 billion per annum, most of which are generic drugs. The government wants to raise these exports to $25 billion in the next three years.

Commenting on the settlement, Secretary-General of Indian Drug Manufacturers' Association (IDMA) Dara B Patel said: "We are very glad that this has happened. We have been waiting for it to happen for a long time."