Trade relations between the US and India has been under strain for some time now and the indications are that it may not improve in the near future. Different trade organisations in the US have asked the US government to designate India as a Priority Foreign Country in its annual review of countries on the ground that India denies adequate and effective protection of intellectual property rights. Such pressures on the US government may end up in an investigation under the Trade Act which could ultimately lead to sanctions on India. The US International Trade Commission has also been instructed by Congressional leaders to investigate India’s industrial policies that discriminate against US imports and investments for supporting Indian domestic industries. Perhaps, an issue of great concern for the American business is the flexibilities existing in Indian patent law intended to promote greater access to generic medicines. International pharmaceutical companies have been putting pressure on the US government for some years to act against India for producing and exporting several cheap generic drugs to the US and many other markets. The provocation for the US government now to take a stand against India is the set of decisions relating to pharmaceutical patents by the Indian judicial system and patent authorities since last two years. In 2012, India issued its first ever compulsory license to domestic drug company, Natco Pharma Ltd, for a kidney and liver cancer drug, Nexavar, patented by Germany's Bayer AG.  In 2013, India’s Supreme Court rejected the patent claim of Novartis for Glivec, an anti cancer drug, after a seven year old legal battle with Indian authorities. In this case, the apex court was only right in upholding the Section 3(d) of the amended Indian Patent Act which prohibits evergreening of a drug patent by the inventor company by just making some incremental changes to the original molecule.

Now the likely action by the US government against Indian business interest has alerted the senior government officials at the Centre. A high-level meeting of top officials from various ministries was held early this month to discuss apprehensions over the US sanctions against Indian companies on the ground that India has a lax intellectual property rights regime. The unanimous decision at the meeting is that India will not tolerate such a move from Washington and will not cooperate with the US on any sort of investigation on Indian IPR or trade laws. The government of India earlier made it clear to the world that more compulsory licenses may be issued under the amended Indian Patents Act for manufacture of patented pharmaceutical products if the drug is considered unaffordable to majority of people. The TRIPS agreement allows a country to issue compulsory licence without the consent of the innovator if it is in public interest. In case the US contemplates to impose sanctions on India, the government of India will have to take the dispute to the WTO. The US government cannot take any unilateral action against any country just because some private companies there are getting affected by just trade policies of India.