NITI Aayog proposes pharma chapter for future FTAs, urges India to move up value chain

New Delhi: Niti Aayog has proposed a model chapter on the pharmaceutical sector to serve as a blueprint for future free trade agreements to improve regulatory predictability, while urging India to diversify into high-value pharmaceutical segments.

In the eighth edition of Trade Watch Quarterly, the Aayog backed greater regulatory transparency and stronger industry-academia technology transfer in life sciences clusters to accelerate patent commercialisation, research collaboration and startup incubation.

The report also called for environmental compliance to be shifted from individual firms to shared infrastructure, saying stricter environmental requirements have significantly increased manufacturing and research and development costs.


It noted that India's pharma supply chain remains heavily dependent on China for critical active pharmaceutical ingredients (APIs) and key starting materials, with 65% of such imports sourced from the country.

Weak innovation and commercialisation ecosystems, it said, have created uncertainty for innovators and long-term investment.

Niti Aayog VC Ashok Kumar Lahiri said India is widely regarded as the pharmacy of the world.

"Niti Aayog has found out that while we are doing all right in terms of volume in the pharmaceutical sector, we need to move up the value chain," Lahiri said. India has built credibility in global markets and its pharmaceutical companies should be able to command a larger international presence if they offer high-quality, competitively priced branded products, he said.

"As global market dynamics rapidly shift towards high value, knowledge-intensive biopharmaceuticals, India must complement its traditional manufacturing scale with deeptech innovation... to graduate from the pharmacy of the world to an undisputed capital for pharma innovation," the report said.

India supplies affordable generic medicines to markets around the world, meeting about 50% of Africa's, 40% of the US' and 25% of the UK's generic drug requirements.