India's drug policy of stringent price control regime is a major concern for United States industries because it creates obstacles to maintaining viable businesses in the country, according to a report by the United States Trade Representative.

The annual report, ''2003 National Trade Estimate Report on Foreign Trade Barriers,'' is based on information complied by the USTR, the Commerce department and other US government agencies.

The price control regime adversely affects US companies from a commercial standpoint, the report said, because there is no system for automatic adjustments of prices to offset cost fluctuations.

''With the lack of effective intellectual property protection couple with a rigid pricing system, US industries face extreme obstacles to maintaining viable businesses in India,'' the report said.

Industries most hit by the policy are pharmaceutical companies ''placing the best and latest innovative drugs on the Indian market,'' it said, and industry representatives have made known to the Indian government the need for India adopting free pricing measures.

The report also faulted India's intellectual property rights and patent protection measures for being weak and having ''adverse effects'' on US pharmaceutical and chemical firms.

India's patent act prohibits patents for any invention intended for use or capable of being used as a food, medicine or drug or relating to substances prepared or produced by chemical processes, it added.

The Report said many US-invented drugs were being widely reproduced in India because product patent protection is not available. ''US agrochemical industries have joined other industries in raising concern about India's inadequate intellectual property protection.'' As a result, the report said, industries have withheld marketing and production of compounds in India.

The US industry estimates that export sales losses range from $5 million to $25 million as a consequence.

Another area of inadequate protection cited by the report is copyrights. Although Indian copyright law offers strong protection, the Indian Constitution gives enforcement responsibility to state governments, it said.

Because of backlogs in the court systems and documentary and other procedural requirements, few cases have been prosecuted recently, the report said.

Cable television piracy continues to be a significant problem with estimates of tens of thousands of illegal cable systems in operation, the report said.

Copyrighted US products transmitted over these illegal systems often use pirated video cassettes, VCDs or DVDs as source materials, it said.

This widespread copyright infringement has a significant detrimental effect on all motion picture market segments. In India, pirated videos are available in major cities before their local theatrical release.

Trade losses due to the piracy of US motion pictures, sound recordings and musical compositions, computer programs and books totalled $343 million in 2001 alone, the report said quoting the Intellectual Property Rights Alliance.

It noted that anti-piracy efforts in the business application software field have resulted in a slight drop in business software piracy rate from 78 per cent in 1995 to 70 per cent in 2001.

The US trade deficit with India was $7.7 billion in 2002, an increase of $1.7 billion over the previous year.

US goods exports in 2002 were $4.1 billion, up 9.1 per cent from the previous year, the report said. Corresponding US imports from India were $11.8 billion, up 21.4 per cent.

India is currently the 27th largest export market for US goods, the report said.

UNI