NITI Aayog has proposed a series of reforms to transition India from pharmacy of the world to a global pharmaceutical innovation hub, including boosting R&D, accelerating patent approvals, promoting high-value drug manufacturing, strengthening industry-academia linkages, addressing trade barriers, enhancing FTA provisions, and encouraging sustainable production.
While India’s pharmaceutical sector has strong foundational advantages in generic manufacturing, scale, and regulatory compliance, its global competitiveness remains constrained by limited presence in high-value segments, Niti Aayog said in its Trade Watch report for Q4FY26.
The latest edition focuses on India’s API and pharmaceutical trade, highlighting opportunities in a global market valued at $1.3 trillion, including $261.2 billion in APIs. The sector contributes 1.7% to India’s GDP, 7.2% of manufacturing GVA, supports 2.7 million jobs, and exported $35.8 billion worth of products.
Despite being a leading supplier of generic medicines and vaccines, India’s global export share is only 2.8%, underscoring significant potential to expand into high-value segments such as biologics, immunologicals, vaccines, and advanced therapeutics, it said.
The report said India must realign its pharmaceutical ecosystem to capture emerging opportunities and move up the value chain. NITI Aayog has recommended a comprehensive strategy centred on innovation, regulatory reforms and sustainability.
The report calls for diversification into high-value pharmaceutical segments, building on initiatives such as the Mission Biopharma SHAKTI scheme launched in 2026-27. It also stresses the need to strengthen the innovation and R&D ecosystem through expanded incentives, public-private research partnerships and dedicated funding for advanced therapies and biopharmaceuticals. Greater transparency in regulatory processes is seen as essential to support innovation.
To improve investor confidence, the report advocates a time-bound patent opposition and grant process with clearly defined timelines. It also recommends stronger industry-academia collaboration through technology transfer offices, joint research centres and start-up incubation programmes to accelerate commercialisation of scientific research.
Recognising the growing importance of regulatory barriers in pharmaceutical trade, NITI Aayog suggests enhanced international regulatory cooperation, streamlined approval processes and dedicated support for MSME exporters. A model pharmaceutical chapter for free trade agreements is also proposed to ensure consistency in negotiations and improve market access.
Further, the report highlights the importance of sustainable manufacturing, urging support for green technologies, common effluent treatment facilities and resource-efficient production systems to maintain global competitiveness while meeting environmental standards.