New Delhi: China's move to mandate inspection by its own authorities for foreign companies to bid in its bulk drug procurement programme could deepen barriers for generic manufacturers in India's $60 billion pharmaceutical industry. Industry representatives are preparing to seek government intervention over what they see as a fresh non-tariff trade barrier, according to two people familiar with the matter and a communication reviewed by Mint.
Under the 12th round of China's Volume-Based Procurement (VBP) programme, for which bidding is slated for 31 July, generic drug makers must now submit good manufacturing practice (GMP) inspection reports issued by Chinese authorities. Such inspections were not mandatory so far, the people said. Bidding for the 12th batch of VBP is scheduled for 31 July. 1 November is the deadline when China begins strictly enforcing its new manufacturing compliance and inspection rules.
Representatives of India's pharmaceutical industry, which accounts for a fifth of world's generic medicine supply and ranks third globally by volume, fear they will be at a disadvantage in the procurement process.
In view of this “non-tariff trade barrier” and the widening trade imbalance, the Indian Drug Manufacturers’ Association (IDMA) has sought information from member companies regarding the affected products, manufacturing sites, and the commercial risks. They are evaluating the overall impact on drug exporters to prepare a response plan that may involve Indian government’s intervention to resolve the pressing challenge, said the people cited above.
Valued at over $250 billion, China has the second-largest medicine market in the world after the US. The country imports $6-8 billion worth of raw drug ingredients every year, with India supplying inputs worth only $240-270 million to it, as per government data.
Skewed trade balance
Data from India’s commerce ministry shows a skewed trade relationship between the two neighbouring nations.
India depends on China for pharma raw materials, as it imports bulk drugs, active pharmaceutical ingredients (APIs), and drug intermediates worth over $3.2 billion from China annually, and the country accounts for about 73% of India's total API imports. On the other side, of India's total global pharma exports of $31.11 billion in FY26, finished medicine shipments to China accounted for just $287 million. This disparity is widening India's overall trade deficit with Beijing, which was at $112 billion in FY26.
Mint reviewed IDMA's 20 July communication to its members that said the inspection mandate is a new hurdle for foreign suppliers and since Chinese audits of foreign facilities are sparse, India's exporters may ultimately face disqualification from bidding in generic medicine tenders.
"It is understood that such inspections are not mandatory under China's existing regulatory approval framework and are conducted only on a limited and selective basis. This may potentially affect the participation of Indian pharmaceutical manufacturers in the Chinese market," the IDMA communication said.
The association requested detailed feedback regarding product portfolios, export volumes and manufacturing infrastructure, while also seeking details on operational, regulatory and commercial concerns. It noted that under the new framework, overseas generic drugmakers must furnish valid inspection papers directly from Chinese regulatory agencies as part of the formal submission.
Viranchi Shah, national spokesperson of the IDMA that represents 1,200 member companies, confirmed the development and said: “The procurement guidelines only matter if products secure market authorization in the first place. Whether a procurement policy is favourable or unfavourable, the reality is that China simply doesn't take or register our generics."
"There is a non-tariff barrier in place, they don't register them at all. Only when they register our products do procurement norms even come into play. Right now, within generics, they only register select anti-cancer products,” said Shah.
Checks a global norm?
A section of experts feels there is limited scope for the Indian government to intervene. “China is increasingly deploying regulatory instruments to shape market behaviour, deepen supply-chain visibility and strengthen strategic control across sectors including pharmaceuticals. Since third-party inspections and GMP verification are internationally-accepted quality assurance practices, India's policy space is relatively constrained unless the measure can be shown to be unnecessarily trade restrictive under WTO (World Trade Organization) rules," said Ram Singh, professor & head (CDOE) at Indian Institute of Foreign Trade, New Delhi.
"India should diversify export markets, deepen regulatory cooperation with trusted partners, and leverage FTAs to broaden pharmaceutical access while reducing dependence on any single market,” he added.
Uday Bhaskar, director general All India Drugs Control Officers Confederation and former director general of the Pharmaceuticals Export Promotion Council of India, also said China's move was not extraordinary.
“Foreign facility inspections are a standard global practice. Regulatory authorities worldwide, including those in the US, EU, UK, Japan, Korea, etc., and even in very small countries regularly inspect Indian facilities before issuing certificates. When China introduces similar requirements for its national procurement, it reflects their rights as a sovereign nation to set procurement conditions,” he said. “Indian manufacturers already comply with stringent international standards and should demonstrate similar readiness for the Chinese market….If companies want to participate in Chinese tenders, they must comply with their regulatory expectations rather than seeking exemptions."
Srikanth Kondapalli, professor of Chinese Studies at School of International Studies, JNU in New Delhi, said: “India is roughly 70% dependent on Chinese APIs, and China’s upcoming 1 November regulations require sharing manufacturing data. If Indian firms fail to comply, Beijing could restrict API supplies."
Pitching for government talks to ease the issue, he added: "While negotiations can help address these challenges, the ultimate solution is self-reliance under Atmanirbhar Bharat by reviving API manufacturing to secure national supply chains.”
Queries emailed to the Chinese embassy in New Delhi, India’s ministries of external affairs and commerce and industry, department of pharmaceuticals, Drugs Controller General of India’s office, and the Pharmaceuticals Export Promotion Council of India on 28 July remained unanswered until press time.
(Harsh Kumar contributed to this story.)