New Delhi, Jun 23 (PTI) India's pharmaceutical supply chain remains heavily dependent (65 per cent) on Chinese imports for critical active pharmaceutical ingredient (APIs) and key starting materials, NITI Aayog said on Tuesday.

The Aayog, in its eighth edition of 'Trade Watch Quarterly', further said that rising environmental compliance requirements have significantly increased manufacturing and R&D costs in India.

"Supply Chain and Sustainability Challenges: India's pharmaceutical supply chain remains heavily dependent on Chinese imports (65 per cent) for critical active pharmaceutical ingredient (APIs), Key Starting Materials (KSMs), and intermediates, particularly fermentation-based products," it said.

The report pointed out that weak innovation and a commercialisation ecosystem have created uncertainty for innovators and long-term investments.

It pitched for promoting diversification into high-value pharmaceutical segments.

The report also called for enhancing regulatory transparency and stronger industry–academia technology transfer in life-sciences clusters to accelerate patent commercialisation, research collaboration, and startup incubation.

Releasing the report, NITI Aayog vice chairman Ashok Kumar Lahiri said India is considered the pharmacy of the world.

"NITI Aayog has found out that while we are doing all right in terms of volume in pharmaceutical sector, we need to move up the value chain," Lahiri said.

He said India has some credibility in the international market, and he does not see any reason why Indian pharmaceutical companies, if they come up with good quality, modestly priced branded products, should not command a high international market.

India is a major supplier of affordable generic drugs (in volume), meeting approximately 50 per cent of Africa's, 40 per cent of the USA's, and 25 per cent of the UK's generic medicine requirements.

The global drugs and pharmaceuticals market demand stood at USD 1.3 trillion in 2025, comprising USD 1.02 trillion of pharmaceuticals and USD 261 billion of API.

India's total trade grew at 5.4 per cent in Q4 of FY2026, reaching USD 1.84 trillion.

While India's merchandise exports declined by 2.8 per cent (USD 112.03 billion) in Q4 of FY2026, imports increased by 12 per cent (USD 195 billion). Services exports increased by 9 per cent (to USD 111 billion), and imports rose by 4.1 per cent (USD 50.7 billion).

India remained the world's eighth-largest services exporter in 2025. PTI BKS HVA

Pharmaceutical supply chain dependence drives calls for diversification, regulatory transparency and stronger innovation ecosystems in India. India's pharmaceutical supply chain remains heavily dependent on Chinese imports for critical active pharmaceutical ingredients, key starting materials and intermediates. Rising environmental compliance requirements have increased manufacturing and research and development costs, while weak innovation and a limited commercialisation ecosystem create uncertainty for innovators and long-term investment. The report calls for diversification into higher-value pharmaceutical segments, greater regulatory transparency, and stronger industry-academia technology transfer to support patent commercialisation, research collaboration and startup incubation.