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Divya is 28, in her seventh month of pregnancy and a surrogate for an Australian couple in their 40s. (Her last name has been withheld because her family members are unaware she is a surrogate, and because of the stigma that surrogacy carries in India.) This is not the first baby Divya has carried that is not her own — there was another in 2010, for an Indian couple. She is one of the millions of surrogates who help to generate 24.8 billion rupees in revenue each year and, along with roughly 3,000 clinics that provide in vitro fertilization, have turned India into the surrogacy capital of the world.

Because surrogacy is legal but not regulated, surrogates like Divya are subject to exploitation by middlemen, clinics and would-be parents, say women's health advocatesLast month, India lost another opportunity to regulate its multimillion-dollar surrogacy industry, as the country’s Parliament failed to pass the Assisted Reproductive Technique bill, or ART, during its winter session, citing a lack of time. Critics of the bill say it doesn’t do enough...