In its latest Trade Watch Quarterly for January–March 2025-26 (FY26), released on Tuesday, the apex think tank said the proposed chapter should incorporate enforceable provisions on regulatory reliance, product registration, standards harmonisation, intellectual property cooperation, and transparent dispute-resolution mechanisms.
“A model chapter would help ensure greater consistency in negotiations, strengthen market access outcomes, and systematically address non-tariff barriers affecting pharma trade,” it argued.
According to the report, India faces 716 non-tariff measures on medicines across the US, European Union (EU), Canada, Japan, and Switzerland alone. “Non-tariff measures have become increasingly restrictive compared with tariffs, raising compliance costs and serving as key barriers to global trade through complex standards, certifications, and regulatory requirements,” the Aayog argued. The recommendation comes against the backdrop of what the Aayog calls “inadequate integration of trade policy with pharmaceuticals”.
“Several existing FTAs contain pharma-related provisions, but the benefits on the ground are mixed because many provisions remain cooperative in nature,” the report observed. It singled out the recently concluded India–EU FTA, which has incorporated pharma-specific regulatory cooperation clauses, as a “step in the right direction”. Still, it cautioned that such clauses “need to be widely included across the several FTAs that India is in the process of ratifying”. The urgency, the Aayog argues, stems from the gap between India’s manufacturing scale and its value capture.
According to the report, while India accounts for nearly 60 per cent of global vaccine production by volume, it captures just 0.6 per cent of the dollar value of global trade in vaccines, blood products, and immunologicals — the fastest-growing segment of the $1.3 trillion global pharma market. India’s overall share remains a modest 2.8 per cent. “This disconnect stems from producing primarily low-cost, conventional vaccines rather than higher-value patented therapies,” the report said.
The report laid out a forward-looking agenda anchored in five pillars: diversification into high-value segments, deeper research and development investment, time-bound patent opposition procedures of six to 12 months, stronger industry–academia technology transfer, and a shift in environmental compliance from a firm-level burden to a shared-infrastructure model.
The Aayog also flagged India’s continued dependence on China for active pharmaceutical ingredients (APIs) as a strategic vulnerability. The top five API categories account for 84 per cent of imports, with China supplying 66–86 per cent of each, and the report urged accelerated fermentation-based manufacturing and source diversification.
The wider trade picture, the report noted, was clouded by the West Asia conflict. Shipments of gems, jewellery, and petroleum products to the US, the Netherlands, and Gulf Cooperation Council (GCC) markets contracted sharply during the quarter, weighed down by global logistics costs and shipping rerouting challenges linked to disruptions in West Asia.
“Despite the Strait of Hormuz crisis, despite the commodity price shocks, we have held our head high, but we need to do much better,” remarked Ashok Kumar Lahiri, vice-chairman, NITI Aayog, at the launch of the report.
Crude oil and petroleum inflows from the GCC also fell amid supply-side disruptions in regional energy markets, even as India’s total trade rose 5.4 per cent during April–March FY26 to reach $1.84 trillion.
 "pharma, drugs, medicine")