India wants would-be parents using surrogates to pay a bond in case they decide not to take the baby
The bill, if passed by parliament, will create a government agency to fix and monitor the standards of cleanliness, medical expertise and ethics of fertility clinics.
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Two years after it was first mooted, India is close to finalising a draft bill to regulate the country's surrogacy industry.
Though worth 28.4 billion rupees (HK$3.4 billion), the industry is still unregulated, leaving the surrogate mother open to exploitation by middlemen and the child to abandonment if the commissioning parents renege on the agreement.
One provision, aimed at protecting the baby against rejection by foreign couples by insisting they deposit a bond, has aroused mixed reactions. The bond will be used to raise the baby born to the surrogate if the couple decide not to take the baby home.
"This measure has been made necessary because of the controversial Australian couple who rejected a baby boy but took the boy's twin sister home," said Dr Vishwa Katoch, secretary of the Ministry of Family Welfare's health research department.
Katoch, who has helped to draft the Assisted Reproductive Technologies Bill, was referring to an Australian couple whose Indian surrogate gave birth to healthy twins in November 2012.
They reportedly told the Australian High Commission in the Indian capital that they already had a son and wanted a girl to "complete" their family.
According to the Australian media, a senior Australian judge said earlier this month that the couple could face investigation for abandoning the boy. It is thought a childless Indian couple adopted the boy.
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