A June 2026 report from NITI Aayog identifies challenges within the Indian government's self-reliance objectives for the pharmaceutical sector. India produces approximately 20% of the world's generic drugs by volume and supplies about 60% of global vaccine doses.

Despite its production volume, India's share of the global vaccine market by value is 0.6%. The nation is reliant on China for more than 65% of its key starting materials (KSM) and active pharmaceutical ingredients (APIs). This dependency extends to specific medications, with imports from China exceeding 85% for entire categories of life-saving drugs, including antibiotics and fever reducers.

Indian pharmaceutical companies invest an estimated 7% of their revenues in research and development, according to NITI Aayog analysis. In contrast, top international pharmaceutical companies typically allocate 15% to 20% of their revenues to research and development. Ashok Kumar Lahiri, vice chairman of NITI Aayog, stated the sector needs to "move up the value chain." In some research and development operations within India, between 35% and 40% of expenses are spent on managing wastewater and securing environmental approvals.

Why It Matters

The NITI Aayog report indicates structural weaknesses in India's pharmaceutical sector, despite its global production of generic drugs and vaccines by volume. The reliance on external sources for critical raw materials from China in key drug categories shows a potential vulnerability to the continuity of the pharmaceuticals supply chain. The disparity in research and development investment between Indian pharmaceutical companies and their international counterparts, coupled with specific operational expenses for environmental compliance, points to challenges in fostering innovation and domestic manufacturing capabilities, which can affect the government's self-reliance goals.