India - 5-Protection of Property RightsIndia - Protection of Property Rights
Real PropertySeveral cities, including the metropolitan cities of Delhi, Kolkata, Mumbai, and Chennai have grown according to a master plan registered with the central government’s Ministry of Urban Development. Property rights are generally well-enforced in such places, and district magistrates—normally senior local government officials—notify land and property registrations. Banks and financial institutions provide mortgages and liens against such registered property.
In other urban areas, and in areas where illegal settlements have been built up, titling often remains unclear. As per the Department of Land Resources, in 2008 the government launched the National Land Records Modernization Program (NLRMP) to clarify land records and provide landholders with legal titles. The program requires the government to survey an area of approximately 2.16 million square miles, including over 430 million rural households, 55 million urban households, and 430 million land records. Initially scheduled for completion in 2016, the program is now scheduled to conclude in 2021. Traditional land use rights, including communal rights to forests, pastures, and agricultural land, are sanctioned according to various laws, depending on the land category and community residing on it. Relevant legislation includes the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act 2006, the Tribal Rights Act, and the Tribal Land Act.
Foreign and domestic private entities are permitted to establish and own businesses in trading companies, subsidiaries, joint ventures, branch offices, project offices, and liaison offices, subject to certain sector-specific restrictions. The government does not permit foreign investment in real estate, other than company property used to conduct business and for the development of most types of new commercial and residential properties. Foreign Institutional Investors (FIIs) can now invest in initial public offerings (IPOs) of companies engaged in real estate. They can also participate in pre-IPO placements undertaken by such real estate companies without regard to FDI stipulations.
To establish a business, various government approvals and clearances are required, including incorporation of the company and registration under the State Sales Tax Act and Central and State Excise Acts. Businesses that intend to build facilities on land they own are also required to take the following steps: register the land; seek land use permission if the industry is located outside an industrially zoned area; obtain environmental site approval; seek authorization for electricity and financing; and obtain appropriate approvals for construction plans from the respective state and municipal authorities. Promoters must also obtain industry-specific environmental approvals in compliance with the Water and Air Pollution Control Acts. Petrochemical complexes, petroleum refineries, thermal power plants, bulk drug makers, and manufacturers of fertilizers, dyes, and paper, among others, must obtain clearance from the Ministry of Environment and Forests.
The Foreign Exchange Management Regulations and the Foreign Exchange Management Act set forth the rules that allow foreign entities to own immoveable property in India and convert foreign currencies for the purposes of investing in India. These regulations can be found at: Foreign investors operating under the automatic route are allowed the same rights as an Indian citizen for the purchase of immovable property in India in connection with an approved business activity. India ranks 138 out of 189 for ease of registering property in the World Bank’s Doing Business Report.
In India, a registered sales deed does not confer title ownership and is merely a record of the sales transaction. It only confers presumptive ownership, which can still be disputed. The actual title is established through a chain of historical transfer documents that originate from the land’s original established owner. Accordingly, before purchasing land, buyers should examine all the link documents that establish title from the original owner. Many owners, particularly in urban areas, do not have access to the necessary chain of documents. This increases uncertainty and risks in land transactions.
Intellectual Property Rights
Engagement with India on Intellectual Property Rights (IPR) continues, primarily through the Trade Policy Forum’s High Level Working Group on Intellectual Property. Despite the release of the National IPR Policy and the establishment of India’s first intellectual property (IP) crime unit in Telangana in 2016, India’s IP regime continues to fall short of global best practices and standards. A number of “Notorious Markets” across the country continue to operate, while many smaller stores sell or deal with pirated content across the country.
India made some progress in fulfilling its mandate to build a more market-oriented and competitive India in 2016, but Prime Minister Modi’s courtship of multinationals to invest and “Make in India” has not yet addressed longstanding hesitations over India’s lack of effective IPR enforcement. U.S. government representatives continued to meet the government officials and industry stakeholders on IPR in 2016, including visits to India by officials from the U.S. Trade Representative (USTR), the U.S. Patent and Trademark Office (USPTO), and the Departments of State, Commerce, and Agriculture. The two governments held two IP-related workshops in 2016, one on copyrights and another on trade secrets. India has made efforts to streamline its IP framework through administrative actions and awareness programs, and it is notable that it is the process of reducing its patent and trademark application backlog by adding 458 new examiners.
Parliament passed the Commercial Courts, Commercial Division, and Commercial Appellate Division of High Courts Act in 2016, which enables the creation of Commercial Courts, Commercial Divisions, and Commercial Appellate Divisions within India’s High Courts. These measures are aimed at improving the ease of doing business and facilitating the smooth and prompt resolution of commercial disputes, including IPR. The U.S. government continues to advocate for the passage of anti-camcording legislation, which would have a significant impact on stopping digital piracy in India and subsequent global distribution. This legislation would also improve India’s ease of doing business rankings, and send a signal to investors and entrepreneurs that the government values transparency, predictability, and the rule of law. As of early 2017, the anti-camcording bill remains stalled in parliamentary committees.
India’s copyright laws were amended in 2012, although these amendments have not been fully implemented. Without a copyright board to determine royalty rates for authors, with enforcement being weak, and piracy of copyrighted materials widespread, India requires greater emphasis on enforcement of copyright law. Industry hopes the recent shift of the copyright office from the Ministry of Human Resource Development to DIPP will enable more effective implementation of the law.
In the software field, India in 2016 released new Computer Related Invention patent guidelines, which require computer programs to be claimed in conjunction with novel hardware, rather than acknowledging technical improvements created by the computer program regardless of the associated hardware, as is the international standard. Industry has rallied the government and a final decision is still pending.
The agriculture sector in 2016 saw some troubling IPR related developments. The Ministry of Agriculture and Farmers Welfare (MAFW) filed an application with DIPP to revoke Monsanto’s patents for BT cotton, and sought to force companies to license their technology and impose unprecedented up-front terms and conditions on private party transactions covering a broad range of genetically-modified agricultural products. The government’s refusal to strongly repudiate MAFW’s overly prescriptive GM licensing guidelines has resulted in the withdrawal of next-generation innovative biotechnology from the Indian marketplace and has given pause to many other companies who seek to protect their technology.
Indian law still does not provide any statutory protection for trade secrets. After the workshop conducted in October 2016, India agreed to provide guidance to start-ups on trade secret protection through existing contract laws. The Designs Act allows for the registration of industrial designs, and affords a 15 year term of protection. India’s Semiconductor Integrated Circuits Layout Designs Act is based on standards developed by the World Intellectual Property Organization (WIPO); however, this law remains inactive due to the lack of implementing regulations. To date, only one application has been granted.
In the past few years, with regular training, customs and police enforcement of IPR laws has marginally increased. The new customs recording system allows trademark owners to record their brands and trademarks with the Ministry of Commerce and Industry and seek affirmative action in case of any counterfeit issue at the ports. In 2016, as a result of a state-level initiative taken by Telangana, India established its first IP Crime Unit. The unit’s intent is to focus on IP crimes and in particular on online crimes. In early 2017, Maharashtra state also approved a new IP unit. The U.S. government is encouraged by this, and hopes that other states will follow suit. However, these represent only two state out of 32, and IP remains a low priority. The nine most vulnerable sectors for IP crime include media and entertainment, pharmaceuticals, automotive parts, alcohol, computer hardware, consumer goods, packaged foods, mobile phones, and tobacco products.
India also actively engages at multilateral negotiations, including the WTO TRIPS Council. It has strongly supported, and sometimes led the charge, in calling for open technology transfer, liberal use of compulsory licensing across sectors, and protection of traditional knowledge. These negotiations will have an impact on innovation, trade, and investment in IP-intensive products and services.
India Economic Development and Investment Law