India-EU free trade pact set to redraw growth map for Indian CDMOs

India-EU FTA could transform India's CDMO sector by cutting pharma tariffs, easing regulations and deepening Indian integration into Europe's drug supply chains

The proposed India-EU Free Trade Agreement (FTA) could mark a structural turning point for India’s contract development and manufacturing organisation (CDMO) industry, strengthening its role in European pharmaceutical supply chains and accelerating the shift of complex manufacturing to India.

 

Industry executives and analysts say the agreement goes beyond incremental export gains, addressing long-standing cost, regulatory and access barriers that have shaped outsourcing decisions by European pharma companies. Phased elimination of tariffs on pharmaceuticals, currently ranging between 2 per cent and 11 per cent, is expected to significantly improve the landed cost economics of India-made drugs and intermediates in Europe’s tightly regulated euros 300 billion medicines market.

 

“The India-EU FTA provides substantial benefits for the pharmaceutical and medical devices sectors, subject to phased implementation,” said Suresh Nair, partner – indirect tax, EY India. “The EU will eliminate tariffs of up to 11 per cent on pharmaceuticals and reduce duties on around 90 per cent of medical devices from as high as 27.5 per cent to zero. This strengthens regulatory cooperation, simplifies compliance procedures, and improves the competitiveness of Indian exporters,” Nair added.

 

For Indian CDMOs, even modest cost advantages can influence long-term manufacturing contracts, especially in complex segments such as injectables, biologics, and drug-device combinations. The FTA’s emphasis on regulatory cooperation and intellectual property protection is seen as equally critical, as it could reduce approval timelines and compliance friction for EU-bound products.

 

Neeraj Sharma, managing director and chief executive officer (MD&CEO) of OneSource Specialty Pharma, said the agreement improves certainty for global customers. “It improves access to large European customers, strengthens supplier linkages, and allows programmes to move faster. Combined with our expanding European footprint following the acquisition of our Poland facility, it reinforces India’s role as a reliable extension of European pharmaceutical supply chains,” Sharma said.

 

Executives also highlight the potential for regulatory convergence through mechanisms such as mutual recognition of good manufacturing practice (GMP) inspections and smoother pharmacovigilance data exchange. This could compress European Medicines Agency (EMA) approval timelines from nearly two years to under 12 months, improving capacity utilisation for Indian CDMOs.

 

For companies such as Akums Drugs & Pharmaceuticals, which already operates EU GMP-accredited facilities across oral solids, liquids and injectables, the FTA could unlock deeper penetration into European markets. “This is not just about tariff reduction but about dismantling trade frictions and building resilient supply chains between India and Europe,” said Arushi Jain, director at Akums. “It cements India’s position as a trusted manufacturing partner amid global supply realignments.”

 

Specialty and oncology manufacturing is expected to see a disproportionate upside. Naprod Life Sciences, which has an established EU GMP presence, views the agreement as a long-term structural positive rather than a short-term volume driver. “Tariff elimination materially improves landed pricing for complex, compliance-intensive products, particularly oncology injectables,” said Mohan Jain, director at Naprod. “This strengthens competitiveness in European hospital tenders and enables longer-term supply commitments.”

 

According to Naprod, the agreement also reinforces confidence in India-manufactured cancer drugs, supporting both affordability and continuity of supply for European health-care systems, an increasingly important consideration amid cost pressures and patent expiries.

 

Policy experts say the benefits could extend beyond pharmaceuticals to medical devices and medtech while enhancing India’s global credibility. “The FTA opens access to a $572 billion pharmaceutical and medical devices market in Europe,” said Nilaya Verma, CEO and cofounder of Primus Partners. “It supports MSME (micro, small, and medium enterprise) participation and technology collaboration with EU firms, and positions India more strongly as a global manufacturing hub.”

 

Verma added that reduced duties could eventually lower prices of high-end cancer therapies and biologics in both regions, particularly as Indian biosimilars enter Europe following major patent expiries.