Minimum Import Price Policy Aims to Boost Domestic Pharma Resilience

• India plans to impose a Minimum Import Price (MIP) on key drug components

• PLI scheme scaled up with Rs. 15,000 crore to boost local API production

• Industry urges data-driven, phased MIP to avoid harming competitiveness

India is considering imposing a Minimum Import Price (MIP) on critical components of medicines to cut the country's dependence on costlier Chinese imports and spur local production. The step is one of a string of government initiatives to increase self-reliance in the drug industry. Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), and Drug Intermediates (DIs).

The sentiment of over-reliance by the country on China for such delicate parts has raised supply chain risk concerns. India is now importing about 80 percent of its bulk drug requirements, with most being imported from China. The proposed MIP aims to level the playing field for domestic producers by discouraging the importation of low-value imports that affect local production.

In parallel, the government has been scaling up its Production Linked Incentive (PLI) scheme launched in 2021 for an expenditure of Rs. 15,000 crore. The scheme led to the establishment of 32 projects with a total installed capacity of 56,679 metric tons per year on the basis of the production of leading-edge APIs and KSMs. Such projects will reduce import dependence and enhance the robustness of India's pharma supply chain.

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Industry bodies such as the Indian Drugs Manufacturers Association (IDMA) have, however, been more guarded in their response. While welcoming the government's push towards self-reliance, they believe that MIPs should be accompanied by facts and a smooth transition. Wholesale actions are feared to ultimately increase the cost burden on local producers and water down India's competitiveness in the international market.

The proposed MIP is also a part of India's overall strategy to de-risk the possibility of over-reliance on Chinese imports and become a good and independent force in the global drug market.