Facing mounting scrutiny over drug safety lapses, India is preparing an overhaul of its pharmaceutical licensing framework by introducing a separate wholesale licensing regime for bulk drugs, active pharmaceutical ingredients (APIs) and key starting materials (KSMs), according to three government officials and documents reviewed by Mint.
The proposed change aims to build a comprehensive database of bulk drug traders, improve traceability of imported raw materials, over 70% of which come from China, and allow regulators to quickly identify and hold accountable specific dealers involved in the supply of substandard inputs in India’s $50-billion pharmaceutical market.
The new mechanism would dismantle the umbrella approach in the current common licensing system for raw materials and finished medicines, give the Drugs Controller General of India (DCGI) a long-missing registry of nearly 1.2 million bulk drug traders, and significantly strengthen traceability and accountability in the country's pharmaceutical market.
The government move comes in the backdrop of India’s reputation as the ‘Pharmacy of the World’ taking a hit due to deaths of children in Uzbekistan, Gambia, Cameroon and India linked to cough syrups manufactured by Indian firms.
As per the officials, a draft notification is in the works for this separate licensing regime for active pharmaceutical ingredients (APIs), including bulk drugs and advanced intermediates, which were valued at approximately $3.5 billion in FY25.
While the total value for India's total pharmaceutical-related imports—including finished products—for FY24 was approximately $8.2 billion, bulk drugs remain the dominant share of this inflow data from the Directorate General of Commercial Intelligence and Statistics and commerce ministry shows.
India’s API market is projected to reach $38.13 billion by 2034, growing at a CAGR of 8.50% from 2025 to 2034, according to reports by research firms like Market Research Future.
“The lack of transparency in the raw material supply chain was highlighted by recent reports of cough syrups contaminated with diethylene glycol, raising serious safety concerns. It is the need of the hour to monitor the supply chain and the quality of high-risk solvents, including propylene glycol used in formulations,” said a government official cited above, requesting anonymity.
The government intends to monitor the movement of raw ingredients with precision through a new and comprehensive database.
“Similar licensing parameters cannot be applied to bulk drug dealers and formulation sellers. Bulk drug sellers manage chemical-based processes for manufacturers, whereas formulation sellers deal with retailers and the public," said a second government official cited above. "By implementing separate licenses, regulators can enforce more stringent storage and handling conditions, ensuring that if a tragedy occurs, the government can immediately identify and hold accountable the specific dealers involved in the distribution of substandard materials."
According to documents reviewed by Mint, there is a proposal to introduce a separate form to apply for bulk drug wholesale licenses. The document stated that currently, APIs and excipients covered under the definition of drugs are sold or distributed to the manufacturer under a wholesale licence, which is common for formulations as well as bulk drugs.
“These two activities are not common as a bulk drug seller deals with the manufacturers while formulation seller deals with the retail seller. Mostly, bulk drugs are imported from China and as such there is no data in the country about how many bulk drug licences are there exclusively for bulk drugs,” the document said.
India relies heavily on imports for several critical bulk drugs, including Penicillin G and Amoxicillin for broad-spectrum antibiotics, Azithromycin for respiratory and skin infections, and Rifampicin for the treatment of tuberculosis (TB). Also, Atorvastatin is a widely used bulk drug for cholesterol-lowering medications, and Metformin is the primary raw material for common Type-2 diabetes medication.
Namit Joshi, chairman of the Pharmaceutical Export Promotion Council of India (Pharmexcil) and director of Centrient Pharmaceuticals, said the primary challenge lies in balancing global competition with the lack of supply chain intelligence.
"There is a need for more detailed data regarding the network of traders, exporters, and importers involved in the trade. Due to lack of data, mapping of entire value chain the gaps remain unattended leading to unawareness,” he said.
Joshi emphasized that APIs are the critical foundation for medicine quality. "The first stepping stone to a quality formulation is the API and excipients. If the raw material is not matching the desired specification , then there is a lot of stress on the fixed dose formulations. A robust and transparent regulatory framework would help immensely in managing the API and excipient quality management system (QMS) which are produced domestically,” he said.
While there are around 1.2 million companies involved in India's bulk drug sector, the regulatory system lacks granular data on their specific locations, the chemicals they trade, import, manufacture, and supply, said a third government official, who also did not want to be named. "The proposed change involves creating a separate licensing regime for wholesalers of APIs and excipients."
While a draft notification is being worked on, the implementation may take time "as it is a completely a new mechanism”, the third official added.
Queries emailed to the spokespersons of health and family welfare ministry and the DCGI on Saturday remained unanswered till press time.
The plan for the licensing scheme is another step in the direction of regulating imports in the crucial sector. The government has already implemented a minimum import price (MIP) on certain bulk drugs, APIs and intermediates, including potassium clavulanate, Penicillin-G and Amoxicillin, to support domestic manufacturing and curb cheap imports, especially from China. Indian companies have also started manufacturing APIs under the government's production-linked incentive (PLI) scheme launched in 2020 with a financial outlay of ₹6,940 crore for FY23 to FY29. According to the government, a total of 48 projects have been selected under the PLI scheme, of which 34 have been commissioned for 25 bulk drugs.
Legal experts say the new licensing regime will bring more companies under the ambit of law.
“Wholesale licenses are currently issued without appropriate oversight mechanisms for the wholesale supply chains to manufacturers as the oversight is geared towards retail sale,” said Akash Karmakar, corporate and regulatory advisory partner at Panag & Babu law firm.
“This is a welcome licensing framework since none existed earlier. This prevented companies which wanted to be compliant from obtaining licenses, as there were none," he said adding that the move will boost the ease of doing business in India, specifically for Chinese API and excipient manufacturers. "This addresses an important gap in the regulatory regime for licensing of formulations of APIs and excipients for wholesale distribution in India.”
The country's API industry has also termed the move as a necessary one. R.K. Agrawal, former president of the Bulk Drugs Manufacturers Association of India (BDMAI), which represents most of India's bulk drug companies, said the government will finally have an account of the people handling bulk drugs and APIs. “I think it will bring improvement to the system because there are many issues regarding pilferage and spurious medicines in transit,” Agrawal said.