* India welcomes U.S. trade decision
* Defends right to overrule patents in special cases
* Some U.S. lawmakers want sanctions against India (Writes through with commerce secretary, industry, context)
By Manoj Kumar
NEW DELHI, May 1 (Reuters) - India said on Thursday it would hold trade talks on intellectual property rights with the United States after its general election, buying time to address friction over drug patents until a new government is formed.
Commerce Secretary Rajeev Kher praised a decision by the U.S. Trade Representative not to label India with its worst offender tag in an annual scorecard on protecting U.S. patents, copyrights and other intellectual property.
"It is a very sensible decision," Kher, India's chief trade negotiator, told Reuters, saying India was committed to protecting copyrights and reining in piracy. "They know very well that India is in transition."
But he defended India's right to overrule patents in special cases - a bone of contention between the U.S. drugs industry and New Delhi, which wants its 1.2 billion people to have access to affordable medicines.
India and the United States set great store by the economic potential of bilateral ties, but their relationship has been troubled by diplomatic and trade battles.
Their $100 billion annual trade is seen as below its potential. Washington says it should be five times that.
In 2012, India issued its first-ever "compulsory licence" to domestic drugmaker Natco Pharma Ltd on a kidney and liver cancer drug, Nexavar, patented by Germany's Bayer AG - allowing a generic version to be made before the patent expired.
Compulsory licensing is compliant with the rules of the World Trade Organization and the deal on Trade Related Aspects of Intellectual Property Rights (TRIPS), Kher said, emphasizing that such licences would be the exception and not the rule.
"That should not be construed to mean that India would be taking compulsory licence as a routine manner of importing technology into the country," Kher told a news conference.
India's drugmakers welcomed the easing of near-term U.S. pressure: "There is always scope for improvement," said D.G. Shah, secretary general of the Indian Pharmaceutical Alliance.
"This can be done through a process of constructive dialogue, not by holding a gun to the head." With Indian markets on holiday, there was no price reaction by drugs stocks.
INNOVATION VS ACCESS
The United States on Wednesday kept India on its Priority Watch List along with China and eight other countries. It said it would start a special review of India in the fall and address concerns with the next government.