US business pressure again on Indian IPR

Tells trade representative's office that New Delhi's already bad record got worse last year; wants action, even as bilateral investment treaty being negotiated

US business continues to voice deep suspicion of India’s intellectual property rights (IPR) regime, something part of official American government policy, too. The pressures in this regard have been reiterated, in strong language.

The office of the US Trade Representative (USTR), the office of the chief negotiator on commercial deals for the US government, had kept India on the Priority Watch List of its annual Special 301 Report in 2013 as well. This report is an official assessment of the global state of IPR protection and enforcement in the US’ trade partners. India, says Michael Froman, the current USTR, is guilty of continuing weakness in its legal framework and enforcement system for IPR.

For its 2014 report, the Global Intellectual Property Centre (GIPC)  of the US Chamber of Commerce has given advance comment. In which, it has strongly recommended India continue to be under the Priority Watch List.  There has been, it alleges, a “rapid deterioration” in India’s IP environment. “India’s failure to develop and adhere to international best practices in the field of IP rights has hindered its economic development, especially over the last year, when its IP environment deteriorated considerably,” GIPC has said.

It recalls that India has been designated as either on the Priority Watch List or Priority Foreign Country every year since the report’s inception in 1989.

“Not only is India making no effort to correct the challenges identified repeatedly in USTR’s Special 301 report, consistent with the statutory definition of a Priority Foreign Country. They are also continuing to impose measures and take actions that rise to the level of the most onerous or egregious IP acts, policies or practices, that have the greatest adverse impact on US businesses,” the letter adds.

Bilateral trade was $63.7 billion (Rs 4 lakh crore) in 2013 (about 1.7 per cent more than in 2012), with the balance strongly in India’s favour. In 2013, the US exported $21.9 bn of goods to India, while importing $41.8 bn worth.

Experts say the renewed raps could also be a fallout of the recent diplomatic row over Devyani Khobragade, the Indian diplomat who was arrested and strip-searched after being accused of visa fraud and underpaying her housekeeper.

“Relations between the countries never smoothened after the Khobragade incident. We have to see how the negotiations go with US. If talks fail and the US is not able to convince the Indian government, then there are high chances of them imposing trade sanctions on us,” apprehends Chintamani Mahapatra, head of the Centre for Canadian, US and Latin American Studies in the School of International Studies at Jawaharlal Nehru University here.

He feels the coming trade negotiations will see the US closely assessing the country’s IPR laws, especially in the pharmaceutical sector. Sector-specific sanctions are possible. “(If so) This will be hugely detrimental to business and deteriorate the investment climate further,” said Chandrajit Bannerjee, director-general of the Confederation of Indian Industry.

There are several dialogue mechanisms to strengthen bilateral engagement on economic and trade issues, including a Ministerial Trade Policy Forum  and a ministerial-level Economic and Financial Partnership. The previous meeting of the India-US Financial and Economic Partnership was held in Washington in October 2013. The two governments are also negotiating a Bilateral Investment Treaty.

At present, the US is also the fifth largest source of foreign direct investment into India. Cumulative FDI inflow from the US from April 2000 to March 2013 was $11.6 bn (Rs 72,000 crore), about six per cent of total FDI into India.