India’s Import Dependence on China in Pharmaceuticals: Status, Issues and Policy Options

Abstract

India has one of the most advanced pharmaceutical industries among developing countries. Yet India is critically dependent on China for supplies of bulk drugs and drug intermediates with China accounting for about two-thirds of the total imports. In the early 1990s, China was relatively a minor source of bulk drugs imports for India. Imports increased since then and sharply accelerated after the early 2000s. By the mid-1990s, India was able to successfully develop a pharmaceutical industry. The policies that India pursued till then significantly influenced the transformation. The mid-1990s however saw the beginning of a series of policy changes in India in the pharmaceutical industry. Unlike China where the government intervened strongly, the role of the government was consciously diminished in India. As a result, India became increasingly dependent on bulk drugs supplied from China. India’s critical dependence on China for bulk drug supplies was flagged from time to time in different circles. The government has been slow in responding to the situation but has now announced major schemes for promoting local production of bulk drugs, drug intermediates and key starting materials. These are expected to have a major impact. But the paper argues that these deal with only a part of the problem and suggests the other policy steps that need to be taken.