India needs to make a decisive shift toward manufacturing high-value pharmaceuticals and Active Pharmaceutical Ingredients (API), economists said on Tuesday, 23 June, reacting to a fresh NITI Aayog report on pharmaceutical trade. While the country ranks among the world's largest suppliers of generic medicines and a major provider of vaccines and essential drugs, its export footprint in advanced segments remains limited.

The Case for a Pharma Leap

Economist Ved Jain argued that the moment is right to pivot toward exporting higher-margin pharmaceutical products. “We should invest in research innovation on basic drugs and facilities and for that, and I believe there has to be a strong PLI scheme for valued products, like high basic drugs and API products,” he said.

Jain also called for removing residual regulatory barriers and ramping up production capacity alongside the push into high-value segments. He noted that the free trade agreements (FTAs) India has signed in recent years could accelerate this transition, provided outstanding regulatory restrictions are resolved.

What the NITI Aayog Report Found

According to the NITI Aayog report released on 23 June, India’s comparative advantage remains concentrated in formulations — particularly retail medicaments and generic drugs — where it holds strong competitiveness even in tightly regulated markets such as the United States and Europe. However, the global pharmaceutical landscape has increasingly shifted toward high-value segments such as biologics, vaccines, immunologicals, and advanced therapeutics, where India’s export presence remains limited.

PLI Scheme: Progress and Gaps

The Production Linked Incentive (PLI) Scheme for pharmaceuticals already supports manufacturing of high-value products including biopharmaceuticals, complex generics, patented and off-patent drugs, orphan drugs, and autoimmune drugs. Since inception through September 2025, the scheme generated total sales of ₹3,08,408.60 crore, of which ₹1,98,509.49 crore came from exports.

Investment under the scheme reached ₹40,294 crore by September 2025, significantly exceeding the original target of ₹17,275 crore. The scheme has also helped reduce India’s import dependence on bulk drugs. Economists, however, argue that a stronger and more targeted PLI is needed to compete in the biologics and advanced therapeutics space.

What Needs to Happen Next

The convergence of a maturing generic export base, signed FTAs, and existing PLI momentum gives India a structural window to move up the pharmaceutical value chain. Critics argue that without a sharper policy focus on research and development, regulatory modernisation, and API self-sufficiency, the country risks remaining a high-volume, low-margin supplier even as global demand shifts toward complex biologics and speciality drugs.

With the NITI Aayog report now in the public domain, industry and policymakers are expected to deliberate on whether the current PLI framework requires recalibration to target these higher-value segments more aggressively.