India’s Pharma Leap: From Global Middleman to Manufacturing Powerhouse

India’s pharmaceutical industry has long been celebrated as the “pharmacy of the world,” a key supplier of generic medicines across the globe. However, this reputation has historically masked an important reality: while Indian firms dominate the production of finished drugs, the majority of essential active pharmaceutical ingredients (APIs) and key starting materials (KSMs) have been imported from China, making India more of a sophisticated assembler than a fully integrated manufacturer.

This dynamic is now rapidly changing. A strategic rethink, spurred by pandemic-induced supply chain disruptions and geopolitical shifts, is driving India’s transition from dependency to self-reliance in drug manufacturing. This evolution is not only reshaping the domestic industry but also strengthening India’s position in global healthcare supply chains.

At the heart of this transformation lies the Production Linked Incentive (PLI) scheme, launched by the Indian government to revitalize pharmaceutical supply chains from their very foundations. Under this policy, domestic firms have made substantial investments in greenfield API projects, with commitments exceeding initial targets and generating new capacity for 26 previously imported materials. Broader PLI initiatives have attracted investments of over ₹40,000 crore, vastly surpassing the original goal of ₹17,000 crore, and have enabled the domestic manufacture of more than 700 APIs and intermediates, including nearly 200 made in India for the first time.

Complementing financial incentives are infrastructure developments such as bulk drug parks in Andhra Pradesh, Gujarat, and Himachal Pradesh. These parks, supported by central and state funding, provide common facilities like effluent treatment plants, solvent recovery systems, warehouses, and utilities — elements that are essential to bringing down the cost of domestic production and enhancing competitiveness with large-scale Chinese manufacturers.

Another driver of change has been the hard-learned lesson from COVID-19: supply chains that are overly dependent on a single source are inherently fragile. When China’s Hubei province went into lockdown in early 2020, India faced shortages of critical drug intermediates, underscoring the risks of external dependency for public health. Policymakers in the U.S. and Europe have drawn similar lessons, enacting laws and alliances to diversify away from a single dominant supplier.

India is uniquely positioned to benefit from this global shift. Its pharmaceutical workforce is highly skilled, and firms are well-versed in meeting stringent regulatory standards required by markets in the U.S. and Europe. Meanwhile, investment in manufacturing technologies and quality systems is strengthening India’s ability to produce not just generics but also complex molecules and excipients demanded by global markets.

Despite significant progress, challenges remain. Environmental clearances, land acquisition issues, and delays in subsidy disbursal have slowed some projects. In areas like fermentation-based APIs, Chinese producers still hold a scale advantage that will take time and sustained technological investment to overcome. Yet the trajectory is clear: India’s pharmaceutical sector, valued at an estimated $67 billion in 2025, is projected to grow to roughly $174 billion by 2033, with an increasing share of value addition happening domestically.

This transformation is about more than economics; it has profound implications for global health security. In a world where supply chains are entwined with national resilience, India’s shift toward manufacturing self-reliance is both a pragmatic industrial strategy and a contribution to global healthcare stability. As India builds capacity from the molecule up, it is not just dispensing medicines — it is forging a stronger, more secure future for global pharmaceutical supply.