The US today retained India on its priority watch list this year for "lack of improvement" in the intellectual property (IP) framework.
"India remains on the priority watch list this year for lack of sufficient measurable improvements to its IP framework on long-standing challenges and new issues that have negatively affected US right holders over the past year, particularly with respect to patents, copyrights, trade secrets, and enforcement," the US Trade Representative (USTR) said in a report.
The 'Special 301' report is an annual review of the global state of IP protection and enforcement.
The USTR's priority watch list names those countries which it considers are not properly protecting the US copyrights and patents.
However, India has never participated in this exercise and has termed this report as an unilateral move.
The report alleges that India's IPR regime is not in compliance with global norms, a charge India strongly contests at all forums.
Trading partners on the priority watch list present the most significant concerns this year regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on IP protection, the report said.
It added that 11 countries including China, India, Indonesia, Russia and Thailand are on this list.
"These countries will be the subject of intense bilateral engagement during the coming year," it added.
Meanwhile, the US Chamber of Commerce in a statement asked India to address challenges in its patent system particularly with regard for computer-related inventions.
The chamber also said that Indian government needs to modernise its copyright laws.
"India continues to dismiss the need for substantive changes to its intellectual property (IP) laws and regulations.
"We will continue to encourage the Indian government to address the biggest gaps in its IP protections, including uncertainties and challenges in the patent system," it said.
Multi-national companies particularly from pharma sector have time and again raised concerns over India's IP regime saying New Delhi's policies discriminates foreign firms.
On the other hand, India has always maintained that its IPR regime is in compliance with the global rules including that of the World Trade Orgainsation.
The developed countries have raised questions about section 3 (d) of the Indian Patent Act 1970 and compulsory licensing (CL), saying the norms restrict innovation.
The section does not allow patent to be granted to inventions involving new forms of a known substance unless it differs significantly in properties with regard to efficacy. In a way, it stops ever-greening of patents.
India's Commerce and Industry Minister Nirmala Sitharaman yesterday said that India's intellectual property right (IPR) laws are in compliance with the global rules and any "suspicious narrative" about the credibility of domestic IPR norms "is just not warranted".
"India has a robust mechanism and legislative framework to deal with IPR related matters," she has said.
The USTR report also said the long-standing IP challenges facing US business in India include those which make it difficult for innovators to receive and maintain patents particularly for pharma and software.
"New and growing concerns, including with respect to draft policies that negatively affect the commercialisation of biotechnology, and the positions that India supports and voices in multilateral forum on IP issues, continue to generate scepticism about whether India is serious about pursuing pro-innovation and - creativity growth policies, it said.
Running into nearly 80 pages, the annual report - the first under Trump Administration -- identifies several countries where the US believes IP protection and enforcement has deteriorated or remained at unacceptable levels and where market access for Americans who rely on IP protection has been unfairly compromised.
Further, it said while Pakistan maintained positive momentum on enhancing its IP regime, stakeholders continue to face a number of challenges in this market.
According to the report, China is home to widespread infringing activity, including trade secret theft, rampant online piracy and counterfeiting.
"China also requires that mandatory adverse terms be applied to foreign IP licensors, and requires that US firms localise research and development activities. Structural impediments to civil and criminal IPR enforcement are also problematic, as are impediments to pharmaceutical innovation," it said.
It added that US innovators face challenges including restrictive patentability criteria, that undermine opportunities for export growth in countries such as Argentina, Canada, India, and Indonesia.
In countries including China, India, Indonesia, Thailand, and Russia, innovators also face lack of adequate and effective protection for regulatory test, it claimed.
"Inadequate protection for trade secrets in a number of countries, notably in China and India, also puts US trade secrets at unnecessary risk," USTR said.
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