For the second year running, Washington has kept India on its Priority Watch List, arguing that the world’s fastest-growing major economy still falls short on protecting and enforcing intellectual property rights. The latest Special 301 review, released in April, applauds Delhi’s outreach to rights holders and its steadily improving patent examination timelines, yet describes India as “one of the most challenging major markets” for American innovators. Behind the diplomatic phrasing lies a familiar warning: if progress stalls, the Office of the US Trade Representative is prepared to escalate matters through dispute-settlement channels.
The rebuke lands at an awkward moment. US firms have never been more active in India’s patent office. In FY 2024, foreign applicants filed 92,168 patent requests; 13,907—the largest slice—came from American companies. Qualcomm alone lodged 3,017 filings, while Samsung, Apple and Google all featured in the top six. Over the past five years, US patent filings in India have jumped 30%, compared with a modest 5.7% rise in the preceding half-decade. Trademarks tell a similar story: of 12,981 foreign marks filed last year, US entities accounted for 3,681.
READ | Ukraine peace built on territorial surrender may not last
This surge reveals a paradox at the core of the bilateral debate. American corporates evidently regard the Indian market—and its growing cohort of engineers and consumers—as too lucrative to ignore, yet their lobbyists continue to flag ineffective enforcement and a high compliance burden at every Congressional hearing.
Intellectual property reforms
Delhi insists the concerns are dated. Since adopting its first National IPR Policy in 2016, India has digitised application portals, launched awareness campaigns and, crucially, amended its Patent Rules in 2024, cutting the window for requesting examination from 48 to 31 months. The move shaved months off approval times and helped drive a 24.6% jump in patent filings and a 149% leap in grants between 2022 and 2023.
Start-ups, once daunted by legal fees, now benefit from the Scheme for Facilitating Start-ups Intellectual Property Protection (SIPP), which offers subsidised counsel and fast-track examinations. By last count, more than 5,000 fledgling firms had tapped the programme, helping propel India to 40th in the Global Innovation Index—its highest ranking yet.
Enforcement and the counterfeit trade
Progress on paper is, however, blunted by patchy enforcement. Rights holders complain that trademark oppositions routinely languish for five years or more; the national backlog tops 250,000 cases. Police units trained in IP crime remain understaffed, while penalties—Rs 200,000 for copyright piracy—are too low to deter commercial offenders. The result is visible in Mumbai’s Heera Panna, Bengaluru’s SP Road and Delhi’s Tank Road markets, all singled out in US reports as hotspots for counterfeit electronics, apparel and even medicines.
Online piracy is another blind spot. Although recent copyright amendments prescribe jail terms for repeat offenders, streaming-platform piracy rings still siphon revenue from Hollywood and Bollywood alike. Without quicker convictions and stiffer fines, Delhi’s legislative fixes risk looking cosmetic.
Sector stakes: Pharma to semiconductors
No industry feels the tension more acutely than pharmaceuticals. India’s reinstatement of product patents in 2005 reassured multinationals developing novel therapies, yet Section 3(d) of the Patents Act—designed to prevent evergreening—continues to unsettle them. US drug makers warn that compulsory licences, invoked during the pandemic, signal an unpredictable policy climate. Conversely, the same provision preserves India’s status as the pharmacy of the Global South: 80% of antiretroviral drugs used worldwide are sourced from Indian generics. Balancing innovation incentives with public-health imperatives will test regulators well beyond the next USTR review.
Technology firms face a different calculus. Copyright reforms have trimmed software-piracy rates by nearly a fifth, and generous subsidies under the Production-Linked Incentive scheme are luring chip designers such as Tata Electronics and HCL into fabless ventures. Yet India still imports 78% of critical semiconductor equipment, while gaps in trade-secret protection leave some foreign partners skittish about transferring high-end process know-how.
Even traditional sectors are in play. Geographical-indication tags for Nagpur oranges or Kanchipuram silk have lifted rural incomes, but 65% of GI holders lack access to quality-certification labs, eroding export premiums. Unless enforcement is strengthened at the grassroots, the commercial promise of India’s cultural assets will remain under-realised.
The road ahead
India’s IP landscape is plainly evolving faster than Washington’s perception of it. But perception matters—especially when trade talks span everything from digital-services duties to market access for medical devices. A credible enforcement overhaul would do more than placate an ally; it would reassure private investors who now treat patents, algorithms and brands as their most valuable assets.
Delhi has shown it can move quickly when stakes are high: witness the rollout of AI-assisted patent examination that cut urban grant times by 40%. Replicating that urgency in trademark adjudication, rural outreach and anti-counterfeit policing could, within a few years, silence the loudest U.S. critics—and, more importantly, unlock the next wave of investment in Indian innovation.
Until then, the contradiction endures: a market brimming with ideas and foreign patents, yet shadowed by doubts about their ultimate security. Whether India ascends from Priority Watch to prized partner will depend less on new statutes than on how rigorously it enforces the ones it already has.