Pharma Exports Constrained by Regulatory Hurdles: NITI Aayog Urges Dedicated Chapter in Future FTAs

Pharma Exports Constrained by Regulatory Hurdles: NITI Aayog Urges Dedicated Chapter in Future FTAs​

The global pharmaceutical market is a massive opportunity, valued at approximately $1.3 trillion in 2025. However, regulatory barriers are acting as a significant constraint on India's pharma exports, despite the country's status as a leading supplier of generic medicines and essential therapeutics.

NITI Aayog’s latest Trade Watch Quarterly report highlights that market access challenges in developed economies are increasingly driven by non-tariff measures rather than tariffs. The report identifies issues like lengthy product registration processes, duplicative inspections, stringent documentation requirements, and limited recognition of foreign regulatory approvals as major hindrances.

Non-Tariff Barriers Dominate Indian Pharma Exports​

Sanitary and phytosanitary measures, technical barriers to trade, licensing requirements, and quality-control regulations account for a striking 95 percent of non-tariff measures affecting pharmaceutical exports in developed markets. These complex hurdles are making it difficult for Indian exporters to fully capitalize on global demand.

Industry consultations cited within the report identified lengthy registration procedures and duplicative inspections as key challenges facing local firms. Furthermore, limited recognition of foreign regulatory approvals adds layers of complexity and increases compliance costs across export markets.

Market Performance and Global Opportunities​

In 2025, India exported pharmaceutical products worth $25.8 billion and Active Pharmaceutical Ingredients (APIs) valued at $10 billion. This performance translates to a modest global share of 2.8 percent in the combined pharma and API trade.

While formulated medicaments remain India's strongest export segment, with exports standing at $22.6 billion against a global demand of $571.5 billion, the segment holds a 4 percent share. The overall picture indicates substantial room for expansion across all segments.

Need for Model Pharmaceutical Chapter in FTAs​

To tackle these systemic regulatory challenges, NITI Aayog recommends that India develop a model pharmaceutical chapter for future Free Trade Agreements (FTAs). This proposed chapter should serve as a blueprint for both bilateral and multilateral trade negotiations.

The suggested provisions must incorporate critical mechanisms such as regulatory reliance, streamlined registration processes, good manufacturing practice (GMP) inspections, standards harmonisation, and transparent dispute-resolution mechanisms. These elements are crucial to reducing compliance costs and improving regulatory predictability in export markets.

Shifting Landscape Towards High-Value Pharma​

The global pharmaceutical landscape is rapidly shifting towards higher-value segments like biologics, vaccines, and advanced therapeutics. This shift presents both a risk and an opportunity for Indian industry.

While India remains strong in generics, its presence in these specialized areas is limited. For instance, the fastest-growing category of blood products and immunologicals saw global imports reach $390.2 billion in 2025. Yet, India's exports in this high-growth segment were only valued at $2.2 billion, corresponding to a slim 0.6 percent of the global market share.

Boosting Innovation and Supply Chain Resilience​

NITI Aayog also underscored India's growing innovation ecosystem. Patent filings in life sciences increased eightfold from 440 in 2013 to 3,576 in 2023. This places India among the world's top ten patent filers in medical technology and biotechnology.

The report recommends accelerating pharmaceutical innovation through greater regulatory transparency and time-bound patent opposition and grant procedures. It also stressed the importance of strengthening domestic capabilities in critical APIs and key starting materials to build resilience into the supply chain.