Intellectual property rights protection and biotechnology
According to the 1994 Uruguay Round Agreement on Trade Related Intellectual Property Rights (TRIPS), India is required to extend product patent protection to all areas of technology, except plants and animals for which a sui generis (of its own kind) system may be developed by a country if it wishes. As a developing country, India has until 2005 to fulfill the obligation. However, TRIPS required India to take certain steps by January 1995, such as the amendment of its patent laws, receipt of product patent applications, and grant of exclusive marketing rights (EMR) to drugs and agro-chemicals. India passed that deadline without amending its patent laws.

The United States complained to the World Trade Organization (WTO) about India's lack of intellectual property rights protection in the patent laws and asked India to strengthen the laws per the TRIPS agreement. The WTO Dispute Settlement Body ruled that India had not acted in a timely manner and that it should take necessary steps to fulfill its obligations by April 1999. These obligations were to be fulfilled by India through a legislative amendment to its Patents Act of 1970. The Patents (Amendment) Act was passed by the Indian Parliament in 1999, but it only partly fulfilled India's obligations.

India has not yet passed any legislation on plant variety protection that would incorporate intellectual property rights in accordance with the TRIPS agreement. TRIPS allows countries to formulate their own sui generis regime for plants as an alternative to patent protection. While India might adopt such a regime that protects the rights of both farmers and seed companies, it has yet to pass legislation. The government enacted the Protection of Plant Varieties Farmers' Rights Act in 2001 and is reportedly preparing other intellectual property protection legislation.

The protection of seed companies' intellectual property rights is necessary for improving the genetic material of seeds. Indian farmers tend to rely on farmer-saved or homegrown seeds, as opposed to the higher yielding genetically improved varieties available from commercial seed companies. Better seed varieties are particularly important for India's oilseed sector, where yields are far below world averages. For example, Indian soybean yields are typically 40 percent of world averages, while yields for peanuts, rapeseed, and sunflowerseed are 50-60 percent of world averages.

The Indian government supports the use of approved transgenic crop seeds and funds research on biotechnology conducted by various agricultural universities and research institutes. Private investment in agribiotechnology is limited but growing. The government coordinates these efforts through the Ministry of Science and Technology, Department of Biotechnology.

The United States is a major supplier of seeds to India, but U.S. seed companies want adequate intellectual property rights protection for transgenic crop seed exports. However, India is opposed to the importation of genetically modified seeds, though not to the use of approved seeds developed domestically.

India approved pest-resistant transgenic "Bt" cotton (developed by the Maharashtra Hybrid Seed Company in collaboration with Monsanto) for commercial production in March 2002. Bt cotton contains genes from bacillus thuringiensis that are toxic to the American bollworm (Helicoverpa armigera), the major insect pest in India. Onfarm field trials in India show that the use of Bt cotton increases yields by curtailing crop losses and lowers costs because of fewer insecticide applications.

References
National Trade Estimate Report on Foreign Trade Barriers, U.S. Trade Representative, Washington, DC.

Intellectual Property Rights in India, policy statements, Embassy of India, Washington, DC.

Quantitative restrictions on agricultural imports
After many years of imposing quantitative restrictions (i.e., quotas) on agricultural imports, India has finally begun lifting this nontariff barrier. In 1997, India applied import restrictions on about 1,000 agricultural products. By 2001, India had freed nearly 850 agricultural products for import.

For almost half a century, India was virtually closed to global agricultural trade. Agricultural and consumer products were subject to licensing requirements that effectively banned their import. Removal of quotas will now allow private sector imports. Though imports are still subject to stiff tariffs, they will benefit from improved market access.

The items freed from quotas are:

• bulk agricultural commodities;
• flour, grit, and meal of wheat, rice, and coarse grains;
• frozen fruit juices;
• meat and meat products;
• nuts;
• tea and coffee;
• tobacco;
• various processed and semiprocessed food items;
• some fresh and processed fruits and vegetables;
• some milk and dairy products;
• some seafood and fish products; and
• some spices.

While the government has lifted quotas, it has imposed other measures to protect domestic agricultural industries:

• State trading enterprises. Only state trading enterprises are permitted to import major bulk products, such as wheat, rice, corn, other cereals, copra, and coconut oil.
  
  
• Biosecurity and sanitary and phytosanitary permits. The Ministry of Agriculture issues permits to import primary products of plant and animal origin.
  
  
• Domestic regulations. Rules regarding manufacture, slaughter, packing, and labeling apply to imports of meat and poultry. Packaging and labeling requirements and statement of maximum retail price govern processed food imports.
  
  
• Tariffs. High tariff rates, surcharges, and countervailing duties discourage imports of agricultural products.

Background. Prohibited or restricted products can be divided into four groups:

• a nonpermissible (banned) list, which contains a few products (e.g., tallow, fat, and oils of animal origin) prohibited on grounds of religious and cultural sensitivities;
• state monopoly (canalized) commodities, which are bulk agricultural commodities (e.g., grains, edible oils, oilseeds, and sugar) permitted for importation only by state trading enterprises;
• a restricted list, which contains all other products, imported within quota limits and with government licenses; and
• a limited permissible list, called the Special Import License (SIL) list, which was created as a slightly freer variation of the restricted list.

Most food and all consumer-oriented products (e.g., fresh, chilled, processed, and semiprocessed foods, seeds, fruits, and vegetables) other than the canalized items are included either in the restricted list or the SIL list. From time to time, products are freed for import by putting them on the Open General License (OGL) list. OGL products still require licenses but can be imported free of quantitative restriction.

India, as a developing country, obtained an exception from the General Agreement of Tariffs and Trade (GATT) as early as 1949 to impose import restrictions on grounds of balance of payments (BOP) provisions in Article XVIIIB of the GATT. Article XVIIIB allows a member country having balance of payment difficulties, arising mainly from a deterioration in its terms of trade or efforts to expand its internal market, to resort to quantitative import restrictions. Since imposing import restrictions in 1957, India has always claimed the BOP exception rule and steadfastly has opposed any outside pressure to remove the restrictions.

With the Uruguay Round Agreement on Agriculture (URAA) signed in 1995, it became obligatory upon India as a URAA signatory to remove quantitative restrictions from all products, including agricultural and consumer goods as they were prohibited per GATT Article XI. India continued to maintain these restrictions claiming exception under Article XVIIIB of the GATT on BOP grounds. India's BOP position, however, changed considerably after the 1991 economic reform. Its foreign exchange reserves progressively increased to $25 billion in 1997 from $1 billion in 1990. The United States and other trade partners complained to the WTO that India, with its enhanced foreign exchange reserve position, could no longer justifiably claim a BOP exception under Article XVIIIB of the GATT and, by continuing with quota restrictions, was violating Article XI of the GATT. The United States pressed India bilaterally to remove its quantitative restrictions but, finding India reluctant to do so, approached the WTO dispute resolution mechanism in 1997.

The WTO Dispute Settlement Body and Appellate Body both ruled that India was not justified in maintaining import quotas on BOP grounds and that it should bring import restrictive measures into conformity with WTO member obligations. In accordance with the ruling, India proceeded to negotiate with the United States bilaterally, which resulted in an agreement in 1999 under which India agreed to remove all quotas in two phases by 2001.

References
National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, Washington, DC.

India Relaxes Restraints on Agricultural Imports, Agricultural Outlook, November 2000, Economic Research Service, U.S. Department of Agriculture, Washington, DC.

Phase Out of Quantitative Restrictions, Government of India, Ministry of Commerce.

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page updated: October 9, 2003