US has not blacklisted India as a priority foreign country in its report on the intellectual property regime of trading partners despite strong demands from its pharmaceutical companies.

India had warned that it would drag the US to the World Trade Organisation (WTO) if the country was blacklisted and trade sanctions imposed against it.

India, however, continues to be on the priority watch list.

The “Special 301” Report brought out by the US Trade Representative office on Wednesday said these countries will be the subject of particularly intense bilateral engagement during the coming year.

Commenting on the development, the U.S. Chamber of Commerce official Mark Elliot said that the trade body was encouraged that the USTR recognised the growing concerns with India’s deteriorating IP environment, and supported the decision to initiate an ‘out-of-cycle’ review of India.

"We hope that this step will generate much needed dialogue for the U.S. and Indian governments to address the concerns identified in the report. We look forward to working with the next Government of India to promote a robust IP climate, " he said.

New Delhi believes that the threat of categorising it as 'priority foreign country' is unjustified as it is reserved for very serious offenders of intellectual property, while India's laws are in line with global specifications.

India's patent Act of 2005 is compliant with the WTO's Trade Related Intellectual Property Rights (TRIPS).

US drug majors, however are upset with Section 3 (d) of the Indian patent law which refuses patents for incremental innovations.

It had also strongly reacted to India's decision to grant a compulsory licence to an Indian company in 2012 for manufacturing a copied version of Bayer's cancer medicine Nexavar in 2012 that brought down prices by 90 per cent.

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