According to chemicals.economictimes.indiatimes.com, India’s pharmaceutical exports surged to $31.1 billion in fiscal year 2025–26, up from $1.9 billion in 2000–01. Yet the sector remains critically dependent on Chinese imports — particularly for active pharmaceutical ingredients (APIs) and chemical intermediates.
Import Dependency Masks Export Strength
While India supplies medicines to over 200 countries and hosts one of the world’s largest clusters of U.S. FDA-approved manufacturing sites outside the United States, its upstream supply chain remains fragile. According to the Pharmaceutical Exports Promotion Council, China supplied 43.45 percent of India’s pharma imports by value in 2023–24, amounting to $3.6 billion. For specific critical inputs, reliance is far more acute: 77 percent of Penicillin G and 94.1 percent of 6-APA — a key beta-lactam intermediate — were imported from China, per government data.
Historical Roots and Structural Imbalance
This dependency emerged over three decades as Indian manufacturers, under intense price pressure, shifted API sourcing to China due to its scale, integrated industrial clusters, cheaper utilities, and easier access to capital. The result was a systemic deindustrialisation of India’s upstream chemical capacity. As Salil Kallianpur, former Executive Vice President at GSK and veteran pharma analyst, observed:
“Chinese mega plants and integrated supply chains give them a sustainable cost edge. Unless India builds an end-to-end ecosystem — from basic chemicals to bulk drugs — dependence on imports will continue as an economic necessity.” — Salil Kallianpur, former Executive Vice President at GSK
Global Shifts Create Opportunity — and New Scrutiny
Geopolitical tensions and pandemic-era disruptions have accelerated U.S. and European efforts to diversify away from Chinese pharmaceutical supplies. The U.S. enacted the BIOSECURE Act and established a Strategic Active Pharmaceutical Ingredients Reserve; Europe’s Critical Medicines Act pursues similar resilience goals. These moves align with the global China+1 strategy, where multinational pharma firms seek alternative, fully traceable suppliers. However, Namit Joshi, Chairman of the Pharmaceutical Exports Promotion Council, warns that global buyers now assess the *entire* supply chain — not just finished dosage forms. Indian manufacturers relying on imported intermediates face competitive disadvantage even as their finished drug exports grow.
Domestic Gaps Extend Beyond APIs
The challenge extends across India’s broader chemicals industry. In fiscal year 2025, India imported chemicals worth more than $54 billion. For pharmaceutical intermediates like paracetamol and amoxicillin, import dependence ranges from 50 to 80 percent, according to industry estimates. Despite a domestic chemicals market valued at $250 billion in 2024, critical gaps persist in upstream specialty and basic chemicals — including those needed to synthesise APIs.
Government Response: PLI Scheme and Bulk Drug Parks
In response, the Indian government launched the Production Linked Incentive (PLI) Scheme for bulk drugs in 2020, allocating Rs 6,940 crore (~$835 million) to boost local production of 41 key APIs and intermediates. Dedicated bulk drug parks are under development in Andhra Pradesh, Gujarat, and Himachal Pradesh. The government reports manufacturing capacity has been established for 26 of the targeted products. Notably, projects to produce Penicillin G and Clavulanic Acid — absent from India’s manufacturing landscape for over two decades — are now underway in Kakinada and Nalagarh.
Resilience Remains a Work in Progress
Despite these initiatives, import trends have not reversed. Data from Pharmexcil shows bulk drug imports rose by 13 percent in the first two months of FY25 versus the prior year. Trade Map and ORF analysis reveals that while finished medicine exports grew from $1 billion in 2001 to $23.3 billion in 2024, API and intermediate imports soared from $1.8 billion to nearly $26 billion over the same period. With India’s pharmaceutical market currently valued at roughly $60 billion and targeting doubling within five years — as stated by Commerce and Industry Minister Piyush Goyal — demand for APIs and intermediates will intensify. Experts stress that long-term competitiveness hinges on developing a self-reliant ecosystem spanning upstream chemicals, energy-efficient utilities, and logistics infrastructure — not just isolated API plants.
Source: chemicals.economictimes.indiatimes.com
Compiled from international media by the SCI.AI editorial team.
