India’s pharmaceutical industry has long traded on one strength: scale. It supplies generic medicines across the world. Yet a large part of that success rests on a weak base. India remains dependent on China for several bulk drugs, active pharmaceutical ingredients, key starting materials and intermediates.
The government now wants to move beyond production incentives. Pharmaceuticals Secretary Manoj Joshi has said the Centre is working on a new support scheme for bulk drugs, with emphasis on research, capacity creation, product development and industry-academia partnerships. The shift is overdue. Subsidies can restart factories. They cannot rebuild a lost industrial ecosystem by themselves.
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Bulk drugs import dependence
The dependence on China is not uniform. It is acute in some antibiotics, vitamins, fermentation-based products and chemical intermediates. In March 2026, the Department of Pharmaceuticals placed before Parliament a list of APIs for which China accounted for 70% or more of India’s imports in FY2023-24 and FY2024-25.
This matters because India’s strength in formulations does not guarantee security in inputs. Indian companies dominate the global generics market. But many supply chains behind that success remain vulnerable.
This is not merely an industrial-policy question. A disruption in APIs used for antibiotics, anti-TB drugs, anaesthetics, critical-care medicines or vitamins can quickly become a public-health problem. The PLI scheme itself was framed around critical APIs where dependence on a single source could disrupt medicines with few substitutes.
The pandemic exposed this risk. Disruptions in Chinese factories and ports raised fears of shortages in critical ingredients. The Centre responded with the ₹6,940 crore PLI scheme for bulk drugs and a separate ₹3,000 crore scheme for bulk drug parks. Three parks have been approved in Gujarat, Himachal Pradesh and Andhra Pradesh.
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PLI cannot rebuild the API ecosystem
The PLI scheme has produced results. The government said in August 2025 that cumulative investment under the bulk drugs PLI scheme had reached ₹4,709 crore against a committed investment of ₹3,938.5 crore. Domestic production capacity had been created for 26 APIs, KSMs and intermediates by June 2025. Sales of ₹1,962 crore had been reported, including exports of ₹479 crore, avoiding imports worth ₹1,483 crore.
A later parliamentary reply said domestic capacity of about 56,800 tonnes per annum had been created for 28 of 41 identified critical products. That is progress. It is not self-sufficiency.
Many APIs moved to China over two decades because China offered lower costs, stronger chemical manufacturing clusters, cheaper utilities, larger effluent-treatment capacity and steady investment in process development. Reversing that will take more than sales-linked incentives.
India’s weakness is not just factory capacity. It is technology, process chemistry, scale efficiency and research. The bulk drugs business is not glamorous, but it is knowledge-intensive. A country cannot secure it by announcing capacity alone.
Bulk drug parks face the real test
The bulk drug parks were meant to address precisely this problem. The scheme provides central assistance of up to ₹1,000 crore per park or a fixed share of the cost of common infrastructure. Its stated purpose is to bring down manufacturing costs through shared facilities and economies of scale.
The list of common infrastructure is revealing. It includes central effluent-treatment plants, solid-waste management, solvent recovery and distillation, warehouses, power systems, water systems, steam generation, cooling networks and common logistics. These are not add-ons. They are the core of API competitiveness.
This is where execution will decide outcomes. A bulk drug park that is slow on land, power, water, clearances or effluent treatment will become another industrial estate. Gujarat’s park at Jambusar, Himachal Pradesh’s park at Una and Andhra Pradesh’s park will be judged by whether they deliver usable common infrastructure, not by sanctioned outlays.
Environmental compliance is central to the economics. API manufacturing is chemistry-heavy and pollution-sensitive. If each plant must separately solve solvent recovery, wastewater treatment, steam, power and hazardous waste, India will not match the economics of established Chinese clusters. Clean common infrastructure is not a green embellishment. It is a cost advantage.
Pharma R&D remains India’s weak link
India is a global leader in generic medicines. It is not yet a comparable force in pharmaceutical innovation. Investment in drug discovery, advanced chemical research and process innovation remains thin. Collaboration between universities, national laboratories and private firms is still episodic.
This is where the proposed scheme must differ from earlier interventions. Grants, common infrastructure and longer support windows can help. But the test will be whether the scheme rewards difficult product development, not just plant construction.
The government has already created one base. The PRIP scheme has an approved outlay of ₹5,000 crore. Seven Centres of Excellence have been set up at NIPERs with a total budgetary outlay of ₹700 crore. By July 2025, these centres had approved 106 research projects.
That is useful, but it is not yet an ecosystem. India has NIPERs, CSIR laboratories and strong private manufacturers. They do not yet work as one chain from molecule to process to plant to market.
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West Asia adds another supply-chain warning
China is not the only risk. Tensions in West Asia have disrupted trade routes, raised freight costs and affected petrochemical prices. Pharmaceuticals use solvents, intermediates, packaging materials and industrial chemicals linked to crude oil and petrochemical chains.
Joshi has said the industry faced initial shortages of some solvents and APIs, but supplies later stabilised. Inputs such as methanol, ammonia and propylene have normalised. Cost pressure remains. Higher crude and petrochemical prices have raised manufacturing, packaging and transport costs. Some medicines have seen raw-material costs rise by 20-30%, though companies have so far absorbed much of the increase.
There were warning signs before this latest assessment. In April 2026, Pharmexcil sought allocation of propylene, methanol, ammonia and butane to manufacturers of solvents and APIs, saying inventories had fallen sharply because of the West Asia crisis. Industry estimates put the monthly requirement of these key starting materials at about 55,000 tonnes, with roughly 80% sourced domestically and 20% imported.
This is a reminder that resilience is not the same as autarky. India cannot produce everything at home. But it must know which inputs are strategic, where dependence is excessive, and which technologies deserve patient support.
India pharma must move up the value chain
A stronger bulk drugs base would support an already successful industry. Pharmaceuticals are among India’s few globally competitive manufacturing sectors. But India cannot remain only a low-cost generics producer.
The next stage lies in process innovation, complex generics, biosimilars, novel delivery systems, specialty drugs and selected advanced therapies. These are harder businesses. They need regulatory depth, research capital and long gestation periods.
The proposed bulk drugs scheme should therefore avoid one error: treating all domestic production as equal. India does need scale in critical APIs. But it also needs support for higher-value products, cleaner technologies, fermentation capacity, difficult chemistry and commercialisation of research.
The design will matter. Firms need policy stability. Investors need clarity on price controls, minimum import prices, procurement and environmental approvals. The Centre has ruled out a blanket increase in medicine prices despite recent input-cost pressures, while saying exceptional cases may be examined individually. That may protect consumers. It also makes predictability more important for investors.
India is already a pharmaceutical manufacturing power. The harder task is to become a centre of pharmaceutical capability. That means owning more chemistry, more processes, more intellectual property and more critical inputs. The new scheme will matter only if it pushes the industry in that direction.