India’s Trade Pact with UK Weakens Its Stance on Compulsory Licensing and Technology Transfer

The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA) has sparked significant debate regarding India’s commitments under its intellectual property chapter, specifically Chapter 13. A particularly contentious provision is Article 13.6, titled “Understandings Regarding TRIPS and Public Health Measures.” The first paragraph of this article states: “The Parties recognise the preferable and optimal route to promote and ensure access to medicines is through voluntary mechanisms, such as voluntary licensing which may include technology transfer on mutually agreed terms.”

India’s acceptance of this clause marks a departure from its longstanding position on two critical fronts. Historically, India has championed compulsory licensing as a vital tool to combat the high prices of patented medicines, rather than relying on voluntary licensing. Additionally, India has consistently advocated that advanced countries must transfer technologies to developing nations on “favourable terms” to support industrialisation and reduce carbon footprints.

The issue of high prices for patented medicines remains a significant flaw within the patent system, often resulting from excessive rent-seeking by patent holders. Compulsory licensing has proven effective in improving affordability by enabling local production of patented drugs. A landmark example occurred in 2012 when Natco Pharma was granted a compulsory licence to produce the anti-cancer drug sorafenib tosylate. This intervention reduced the cost of a month’s treatment from ₹2,80,428, charged by patent owner Bayer Corporation, to less than ₹8,800.

To address such challenges, Indian lawmakers incorporated compulsory licensing provisions into the Patents Act to ensure compliance with the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The legislation, unanimously adopted by both Houses of Parliament after thorough scrutiny by a Joint Parliamentary Committee, allows compulsory licences to be granted three years post-patent grant if public needs are unmet, prices are unaffordable, or the patented invention is not commercially exploited within India.

The Patents Act also enforces a “working” requirement, obliging patentees to periodically report the commercial exploitation status of their inventions. However, this safeguard was weakened through India’s Free Trade Agreement (FTA) with the European Free Trade Association, which extended the reporting interval from annually to a minimum of every three years. The CETA further entrenches this dilution, eroding a key basis for issuing compulsory licences.

By endorsing voluntary licensing as the preferred mechanism for improving access to medicines, India effectively relinquishes its strong advocacy for compulsory licensing within the WTO framework. This right was secured by a coalition of developing countries, including India, through the 2001 Doha Declaration on the TRIPS Agreement and Public Health, which affirmed each member’s freedom to grant compulsory licences and determine their grounds.

Voluntary licences, however, often fail to guarantee affordable access due to the weak negotiating position of domestic companies in developing countries relative to dominant pharmaceutical corporations. Médecins Sans Frontières (MSF) has highlighted that voluntary licences allow patent holders to impose restrictions on supply chains and licensee activities, limiting the availability of affordable medicines. This was evident when Cipla produced the anti-COVID drug remdesivir under a voluntary licence from Gilead Sciences; Cipla’s price in India was higher, in purchasing power terms, than Gilead’s price in the United States.

Beyond pharmaceuticals, the CETA also undermines India’s longstanding demand for technology transfer “on favourable terms” from advanced countries. This demand traces back to the 1974 United Nations General Assembly Resolution on the New International Economic Order (NIEO), which called for facilitated technology transfer to promote industrialisation in developing countries. Despite persistent efforts, progress on this front has been limited.

India’s 2024 Fourth Biennial Update Report to the United Nations Framework Convention on Climate Change reflects this frustration, noting that “barriers like slow international technology transfer and intellectual property rights (IPR) hinder the rapid adoption of [climate friendly] technologies.” By compromising its position on favourable terms for technology transfer in the CETA, India risks weakening its leverage in securing climate-friendly technologies from developed nations.

The implications of India’s concessions in the CETA are profound. The dilution of compulsory licensing provisions may restrict India’s ability to ensure affordable access to essential medicines, while the softened stance on technology transfer could impede its climate change mitigation efforts. These developments raise critical questions about India’s strategic priorities in international trade and intellectual property policy.

Biswajit Dhar, former Professor of Economics at Jawaharlal Nehru University, and K.M. Gopakumar, Senior Researcher and Legal Adviser at Third World Network, emphasize the need for India to reassess its commitments to safeguard public health and sustainable development objectives within trade agreements.

India’s evolving approach to intellectual property in trade pacts like the CETA will continue to attract scrutiny from policymakers, civil society, and international observers concerned with equitable access to medicines and technology transfer.