Domestic API production has begun, but imports still high: Government tells House

India continues to depend heavily on China for several key active pharmaceutical ingredients (APIs), even as government-backed incentives and infrastructure projects begin to show early results in building domestic capacity.

In a written reply to the Lok Sabha on July 25, 2025, Minister of State for Chemicals and Fertilizers Anupriya Patel indicated that the country still imports a significant share of its bulk drug requirements. However, she said efforts under two major production-linked incentive (PLI) schemes and the development of bulk drug parks are expected to strengthen self-reliance in the coming years.

“Under the PLI schemes, domestic production has started to substitute the imports of APIs. Furthermore, bulk drug parks are under development for establishment of large-scale infrastructure,” Patel said in her reply.

Launched in 2020 with a budget outlay of ₹6,940 crore, the PLI Scheme for Bulk Drugs has so far led to cumulative investments of ₹4,570 crore by March 2025—exceeding the committed investment target of ₹3,938 crore. Production capacity has been created for 25 APIs, key starting materials (KSMs), and intermediates. Cumulative sales under the scheme stood at ₹1,817 crore across FY23 to FY25, including ₹455 crore in exports.

The government estimates that this production helped avoid imports worth ₹1,362 crore.

Meanwhile, the broader PLI Scheme for Pharmaceuticals, with a budget of ₹15,000 crore, has enabled domestic sales worth ₹22,658 crore as of March 2025. Of this, ₹1,582 crore came from more than 190 products that were manufactured locally for the first time.

To support long-term expansion, three bulk drug parks—in Andhra Pradesh, Gujarat, and Himachal Pradesh—are under development. These parks are expected to provide subsidised infrastructure and utilities, with additional state-level incentives such as capital subsidies, GST reimbursements, and land at concessional rates.

The April 2025 India Brand Equity Foundation report noted that India is the world’s third-largest producer of APIs by volume. Yet, experts caution that the country’s dependence on China for certain fermentation-based and chemical synthesis APIs will take several years to reverse. Industry leaders believe that addressing cost competitiveness, regulatory efficiency, and scale of production will be critical to achieving meaningful self-reliance.

India’s import share by value rose from 68% in FY20 to nearly 72% in FY24 as per estimates. In volume terms, API imports from China grew by around 30% between 2021 and 2024, raising questions about the pace of localisation.

Bhavin Mukund Mehta, Vice-Chairman of Pharmexcil and Whole-Time Director at Kilitch Drugs, attributed the continued reliance to the nascent stage of import substitution. “Most of the approved projects under the PLI scheme for bulk drugs began taking shape only in the last one to two years. We expect real progress by 2026, as more units become fully operational,” he said.

He also noted that aggressive price undercutting by Chinese suppliers has hindered domestic manufacturers. “Despite growing capacity, Chinese suppliers continue to undercut prices. That said, PLI has already helped reduce costs for several key APIs locally. The ₹4,254 crore invested so far shows strong momentum,” he added.

Mehta believed Indian companies are poised to lead in both traditional and high-value API segments over the next few years. “We are seeing strong traction in fermentation-based APIs, peptides, and complex oncology intermediates,” he said, adding that improved synthetic chemistry and regulatory compliance are helping the industry move up the value chain.

He cited Aurobindo Pharma’s new 3,600 MTPA facility in Kakinada SEZ for manufacturing 6-Amino Penicillanic Acid (6-APA) as an example of the shift toward self-reliance in beta-lactam APIs.

Beyond incentives, Mehta emphasised the need for affordable access to energy, land, and utilities. “API manufacturing is energy-intensive. Reliable electricity, low-cost fuel, and well-connected industrial land are essential for mid-sized players to scale,” he said. Faster clearances and infrastructure support are equally critical.

He also stresses the need for increased R&D, shared infrastructure like pharma parks, and export promotion. “Mutual recognition agreements with global regulators and targeted support for MSMEs can widen access to international markets,” Mehta said.

The global ‘China+1’ strategy is beginning to benefit Indian API exporters, he added. “We are seeing increased interest from international buyers looking to diversify supply chains. India is well-positioned, but to capitalise fully, we must improve competitiveness across the value chain.”