DAW 2ND January 2026, Mains Answer Writting 2027
Question
Discuss the significance of the pharmaceutical sector in India’s economy. How does India’s heavy dependence on imported Active Pharmaceutical Ingredients (APIs) affect its pharmaceutical supply chain resilience? (250 Words, 15 Marks).
Model Answer
Approach:
Introduction:
Briefly highlight India’s pharma sector as the “Pharmacy of the World” with global rankings, GDP contribution, and export dominance.
Flag the core issue: high dependence on imported APIs (mainly China) affecting supply chain resilience.
Introduce the context of IPA’s demand for zero import duties amid trade and IP pressures, especially from the US.
Body:
Significance of Pharma Sector.
API Dependence & Supply Chain Impact.
Rationale for Zero Import Duties (IPA’s Stand).
Government Response.
Conclusion:
Conclude with the need for domestic API manufacturing, high-value R&D, and diversified global partnerships to sustain India’s leadership and achieve Atmanirbhar Bhara
Introduction:
India’s pharmaceutical sector- known as the “Pharmacy of the World”- is a strategic pillar of India’s economy and global public health. It ranks 3rd globally by volume and 14th by value, contributes about 1.72% to GDP, supplies over 20% of global generic medicines, 40% of US generics, and 50% of global vaccines. However, its competitiveness is constrained by heavy dependence on imported APIs, mainly from China, which weakens supply chain resilience and strategic autonomy. In this context, the Indian Pharmaceutical Alliance (IPA) has advocated zero import duties to safeguard exports- particularly to the US- and to counter trade and intellectual property pressures.
Body:
Significance of the Pharmaceutical Sector in India’s Economy:
Economic and Trade Contribution:
India’s pharma market stood at USD 50 billion in FY 2023–24, projected to reach USD 130 billion by 2030.
Pharma exports reached USD 27.82 billion in FY24, covering over 200 countries, making India the 12th largest exporter of medical goods globally.
The sector adds 0.5–1% annually to GDP growth, strengthening foreign exchange reserves.
Global Health and Strategic Role:
Supplies 55–60% of UNICEF vaccines and 99% of WHO’s DPT vaccine demand.
Indian generics saved the US healthcare system USD 219 billion in 2022, underscoring India’s role as a global public good provider.
Employment and Innovation:
Supports millions of jobs across 3,000 companies and 10,500 manufacturing units.
India ranks 6th globally in patent filings (64,480 in 2023), reflecting a growing R&D base, especially in generics, biosimilars, and vaccines.
Impact of Heavy Dependence on Imported APIs on Supply Chain Resilience:
Extent of Dependence:
India imports around 70% of its APIs, with China accounting for nearly 72–80%.
Critical antibiotics such as Penicillin, Azithromycin, and Cephalosporins have over 90% import dependence.
Supply Chain Vulnerabilities:
During COVID-19, API supply disruptions led to production delays and export uncertainties.
China’s earlier environmental crackdowns caused 25–30% API price hikes, squeezing margins of Indian manufacturers.
Strategic and Economic Risks:
High import dependence exposes India to geopolitical shocks, price volatility, and trade coercion.
Concentration risk undermines India’s credibility as a reliable supplier in regulated markets like the US and EU.
Low Value Addition:
API dependence, limited fermentation capacity, and lower R&D spending (~5% of revenue vs. 15–20% in developed economies) restrict India to low-value generics, affecting long-term competitiveness.
Government Measures to Address API Dependence:
Production Linked Incentive (PLI) Schemes:
PLI for APIs (₹6,940 crore): Targets 53 critical APIs, expected to reduce import dependence by 25–30%.
As of 2025, India has started producing 29 out of 43 critical APIs earlier imported.
Bulk Drug Parks:
₹3,000 crore scheme for parks in Gujarat, Himachal Pradesh, and Andhra Pradesh, providing shared infrastructure to reduce costs.
R&D and Institutional Support:
Centres of Excellence at NIPERs, support from CSIR labs (IICT, NCL).
100% FDI allowed in Greenfield pharma and medical devices.
Way Forward:
Strengthen Domestic API Ecosystem: Focus on fermentation-based APIs, green chemistry, and scale economies.
Move Up the Value Chain: Invest in biosimilars, gene therapy, mRNA vaccines, and personalized medicine.
Enhance R&D and Skills: Tax incentives, AI-driven drug discovery, and academia–industry collaboration.
Diversify Export Markets: Africa, Latin America, ASEAN to reduce overdependence on the US.
Strategic Stockpiles: National reserves for critical APIs and essential medicines to cushion shocks.
Conclusion:
India’s pharmaceutical sector is a key economic and strategic asset, supporting global healthcare affordability and India’s export growth. However, heavy API import dependence undermines supply chain resilience and strategic autonomy. The IPA’s call for zero import duties aims to protect export markets like the US, safeguard India’s public-health-oriented patent regime, and sustain the generics-led model. Going ahead, strengthening domestic API manufacturing, boosting high-value R&D, and diversifying global partnerships are crucial for India to retain its status as the “Pharmacy of the World” and advance Atmanirbhar Bharat.