Indian Commerce and Industry Minister Anand Sharma told Reuters the EU's trade chief, Karel De Gucht, told Indian negotiators during an EU-India summit in Brussels that the issue had been resolved, and De Gucht confirmed the agreement.
"This is a great breakthrough which will of course lead to a suspension of WTO (World Trade Organisation) proceedings. So the dispute is over," said Sharma.
India and Brazil brought a case to the WTO in 2009 saying the EU was wrongly stopping and inspecting shipments of generic drugs in transit, with some shipments being turned away rather than being allowed to continue to their final destination.
The EU is still in legal proceedings with Brazil.
"I reconfirmed we are going to amend present regulation so as to put into practice what has been agreed," De Gucht told Reuters. "Transports in transit will no longer be checked, except for counterfeiting."
The EU said it will amend customs codes that have led to numerous seizures of generic drugs shipments in transit from India to countries in South America via Europe.
The agreement will benefit leading drugs makers such as Dr Reddy's Laboratories Ltd , whose generic drugs -- legal in India but not recognised in Europe -- have been stopped en route to countries such as Brazil.
It is unclear when WTO legal proceedings will be suspended as Friday's agreement needs approval from the EU's parliament.
Trade Talks Continue
Agreement over the WTO dispute sweetened an EU-India summit that failed to provide major breakthroughs in negotiations over a free trade agreement.
Indian and EU leaders on Friday said they would seal a free trade pact early next year. But concerns continue over EU demands that India -- a rapidly growing economy that is battling high levels of rural poverty -- should open up vulnerable market sectors and follow EU patent rules.
Market openings could hurt subsistence farmers and shopkeepers, critics say, prompting public protests in India and Brussels against the trade agreement.
The United Nations warned on Friday that an EU-India trade deal could raise the price of Indian generic drugs that provide cheap treatment for HIV and malaria in poor countries in Africa, South America and Asia.
"Millions in the developing world depend on India for generic medicines at affordable costs. Restriction of generic drug production in India will have a devastating public health impact around the world," United Nations Special Rapporteur Anand Grover said in a statement.
The EU wants India to follow strict and costly registration procedures for its drugs, and observe EU terms of patent validity, which are longer than in India and give pricey branded drugs a longer shelf life.
India's Sharma told Reuters in an interview he will protect the ability of India to produce and export pharmaceuticals and generics. (Reuters)
