The USTR has placed India on its "priority watch" list for two years in a row, saying the country's patent laws unfairly favour local drug makers.
India has defended its right to grant licences allowing local firms to override patents and make cheaper copies of drugs discovered by big Western drugmakers, and said reports to the contrary were "factually incorrect".
The Commerce Ministry statement comes weeks after Reuters and media in India quoted the U.S. business advocacy group, U.S.-India Business Council (USIBC), as saying India had given private assurances that it would not grant such "compulsory licences".
"There have been recent media reports that the Government of India has privately assured that it will not issue any more compulsory licences. It is hereby clarified that such reports are factually incorrect," the ministry said in the statement late on Tuesday.
"In this regard, it may be noted that India has a well-established TRIPS compliant legislative, administrative and judicial framework to safeguard IPRs (intellectual property rights). Under the Doha Declaration on the TRIPS Agreement Public Health, each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted."
India is party to TRIPS, or the Trade-Related Aspects of Intellectual Property Rights, a World Trade Organization agreement that sets down minimum standards for intellectual property regulation.
The USIBC's comments were revealed in a submission it made last month to the U.S. Trade Representative (USTR), which is reviewing global intellectual property laws for an annual report identifying trade barriers to U.S. companies.
The USTR has placed India on its "priority watch" list for two years in a row, saying the country's patent laws unfairly favour local drug makers.
A legal provision that allows granting of "compulsory licences" has been a key bone of contention.
India can grant such licences under certain conditions, such as public health emergencies, to ensure access to affordable medicines.
It granted the first such licence in 2012, allowing local firm Natco Ltd to sell a copy of German drugmaker Bayer's cancer medicine Nexavar at a tenth of the price.
Since that ruling, big Western pharmaceutical companies have criticised India's patent law and lobbied for it to be changed.
The medical charity Medecins Sans Frontieres (MSF), which banks on India's robust generic drugs industry to supply cheap medicines to many parts of the world, weighed in last week saying it was "deeply concerned" about the USIBC's submission.
"Such a commitment will encourage multinational drug companies to start charging unaffordable prices to Indian patients and governments across the developing world, further undermining access to critical, and life-saving products," MSF said.
India's commerce ministry statement did not comment directly on the USIBC's submission.
"Even as government of India is conscious of the need to spur innovation and protect individual rights, it retains the sovereign right to utilize the flexibilities provided in the international (IP rights) regime," the ministry said.
"It may be noted that to date, there has been only one case of compulsory licence in India and that too after a well-thought out and laid down process, which was subsequently upheld right up to the highest Court of the land."
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