Datanomics: Overdependence on China, US plagues India's pharma sector

Govt urges pharma firms to cut import reliance, boost domestic production and diversify exports as data shows rising foreign value addition and heavy dependence on China and the US

Commerce Secretary Rajesh Agarwal recently asked the Indian pharmaceutical industry to reduce its dependence on critical raw materials imported from China by focusing on domestic production, and to find export destinations other than the United States (US) to better navigate global uncertainties. He also underscored the importance of insulating import supply chains in an increasingly fragmented world.

 

Indian pharma’s source & destination problem  

India’s largest export market was the US, with a 30.48 per cent share in the April-February period of FY26. Brazil was a distant second with a share of 2.91 per cent.  China was India’s largest source for imports (38.08 per cent) in the same period.

Foreign share in Indian pharma exports rising 

The share of foreign value addition in India’s pharma exports reached 26.35 per cent in 2022 — the highest so far. Conversely, the share of domestic value addition in foreign demand for pharma products has gradually decreased over the last decade, falling from 36.79 per cent in 2012 to 29.28 per cent in 2022.

Source: OECD’s Trade-in-Value-Added Database

One-fifth of foreign share from China in 2022 

China alone accounted for over 20 per cent of the total foreign value addition in India’s demand for pharma products, followed by the US (12.58 per cent) and Ireland (11.16 per cent) in 2022.