India needs to reduce heavy dependence on Chinese imports for critical pharmaceutical ingredients and scale up investments in high value research-driven medicines if it wants to emerge as a global pharmaceutical powerhouse, according to a government think tank NITI Aayog report released on Tuesday.
The report also flagged that India’s share in global pharma exports is less than 4% across categories, despite the country being the hub of generic medicines. It suggested that India needs to have dedicated chapters on pharma in the Free Trade Agreement (FTA).
“India is doing very well in low-value pharmaceutical products, both in value and volume terms, but we need to move up the value chain," NITI Aayog Vice Chairman Ashok Lahiri said while releasing the report. “We need to produce much more valuable products because that is where the money comes,” added Lahiri.
The report stated that the country’s pharmaceutical supply chain remains heavily import reliant , with more than 65% of imports of critical active pharmaceutical ingredients (APIs), key materials and intermediates being sourced from China, the eighth edition of NITI Aayog's Trade Watch Quarterly said. The report noted that the top five API categories account for 84% of India's imports, with China supplying between 66% and 86% of these products even in 2025.
“Constrained by low R&D intensity (7% of net sales versus 15–20% globally), weak industry –academia collaboration, inadequate technology transfer mechanisms, and delays in patent grants that create uncertainty for innovators and long-term investments,” stated the report.
The report also highlighted that India remains a relatively small player in some of the fastest-growing segments of the global pharmaceutical industry. While India has built a strong position in formulated drugs and generic medicines, exports of blood products, vaccines and immunologicals stood at only $2.2bn, giving India a global market share of just 0.6 per cent despite the segment's rapid expansion worldwide.
Alongside innovation challenges, high non-tariff barriers, including lengthy product registration processes, duplicative inspections, documentation requirements, and limited reliance on approvals from stringent regulators has been a another major roadblock. “ Existing FTAs often lack enforceable pharmaceutical-specific provisions to effectively address these regulatory barriers,” according to NITI Aayog. Thus, it suggested to develop a model pharmaceutical chapter for future FTAs that may serve as a blueprint for bilateral and multilateral trade negotiations with provisions on regulatory reliance, GMP inspection, product registration, standards harmonisation, and transparent dispute-resolution mechanisms to reduce compliance costs.