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International Trade and Finance

Notes however, did not include agricultural products, petroleum products, fertilizers and some non-ferrous
metals like zinc and copper. These tariff reductions were also a part of the package of economic
reforms undertaken in India and had had been recommended by the Chelliah Committee.
The GATT agreement stipulates that anti-dumping proceedings will be terminated if the volume of
dumped imports from a particular country is less than 1% of the domestic market. The only exception
is instances where dumping countries collectively account for more than 2.5 per cent of the domestic
market. Anti-dumping proceedings will be terminated if the margin of dumping is less than 2%.
These clauses do help India to protect its exports from anti-dumping investigations. It would have
been much better for India, had the figure of dumped imports as a share of domestic market been
more than 1%.

Effect of TRIPS on the Indian Economy
Some critics are of the view that Trade-Related Intellectual Property Rights (TRIPs) as embodied in
the GATT agreement will have disastrous effects on our economy, more especially in two vital
areas i.e., pharmaceuticals and agriculture. Both these areas affect the well-being of the people.
TRIPs requires an understanding about the scope of the new patent regime. Under TRIPs patents
shall be available for any invention whether product or process in all fields of industrial technologies.
Patent protection will be extended to micro-organisms, non-biological and micro-biological processes
and plant varieties. This implies that the entire industrial and agricultural sectors and to an extent
bio-technology sector will be covered under the patent provisions.
A very dangerous provision has been introduced in patent protection and this relates to changing the
philosophy of the patent regime whereby products, imported or locally produced, will be covered
under patent protection without any discrimination. This implies that the patent regime not only
tries to establish manufacturing monopoly but it also intends to establish import monopoly. In this
situation, the patent-holder would resort to imports only and the national government would not be
able to exercise any price control on the imported products. This provision will help the patent-
holder to defy all price control measures.
Patent Regime and Pharmaceuticals and Drugs

Patent regime, the critics are of the view, will affect the drug prices seriously. Currently, these prices
are very low in India—thanks to the Indian Patent Act, 1970. Since the enforcement of this Act,
Indian pharmaceutical and drug industry progressed rapidly and was able to provide life saving
drugs very cheaply. Besides this, it was able to earn foreign exchange to the tune of ` 2,386 crore in
1996-97.
Under the new patent regime, according to Mr. B.K. Keayla, Convener, National Working Group on
Patent Laws, about 70% of the drugs will be covered under the new patent laws. Consequently,
under TRIPs heavy payments will have to be made to patent holders and consequently, it is feared
that this would result in the prices of drugs going up 5 to 10 times. At present, only 30 per cent of the
population can afford modern drugs and if the GATT agreement is accepted, another 20 per cent of
the population will lose health cover, leaving only 10 per cent population access to modern drugs.
Such a policy has dangerous implications for the health of our population.
Mr. B.K. Keayla gives two specific examples about drugs marketed by the same MNC in different
countries. In India, there is a process patent of these drugs, but in other countries, they are covered
under product patent. The price differential is so large that it compels one to rethink whether the
introduction of product patent in India, would not push the prices of drugs in India as well to very
high levels.
There is a large body of opinion which does not subscribe to the Government view. In a country,
which is plagued by mass poverty, it is very essential that life saving drugs and other basic medicines
should be available at affordable and low price. This can be achieved only through control over the
prices of drugs. The GATT agreement tends to alter it. There is a genuine fear that drug prices will
rise, more so in view of the fact that the Multinationals are able to corner excessive profits in other
countries, but are not able to penetrate in India so far as price control on drugs is concerned. The

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