New Delhi: With thousands of small drug manufacturers struggling to meet tougher quality norms, the government is weighing a year's extension to the deadline for complying with the revised good manufacturing practices (GMPs), said two government officials aware of the development. The deliberations come ahead of the 1 January 2026 rollout of revised Schedule M standards that are aligned with World Health Organization norms.
The Union health and family welfare ministry will hold consultations with state governments on the issue starting Monday, one of the officials said.
Low compliance by the country’s 8,500 small and medium enterprises (MSMEs) manufacturing pharmaceuticals would raise the risk of plant closures and disruptions across India’s $50 billion pharmaceutical sector, a major global supplier of generic medicines.
The revised Schedule M GMP had been earlier extended from the previous 1 January 2025 cutoff. The proposed extension for MSMEs, which have revenue of ₹250 crore or less, comes in the backdrop of less than a third of them submitting their upgrade plans, with the remaining units risking immediate closure and penalties.
There are a total of 10,500 drug manufacturing units in India, of which 8,500 fall under the MSME category. These units produce 70% of India's generic drugs and they face upgrade costs of ₹10-15 crore per facility. Of these 8,500 MSMEs, 2,000 have already complied with the revised schedule for the new quality standards.
“Out of these 6,500 MSME drug firms, only 1,400 (21.53%) have submitted the necessary upgrade plans to the government,” said the first of the two government officials cited above, requesting anonymity.
“The matter is under the deliberation of the central government, given that starting 1 January 2026, all the states and union territories will start doing the risk-based analysis of these plants, Himachal Pradesh and Uttarakhand governments have already started inspections,” said the second government official, who also did not want to be named.
“The government has received various representations from the MSMEs. Their main concern is regarding the structural changes required under the Revised Schedule M. While many have the intention to comply, they face physical constraints such as a lack of space for expansion or the inability to alter the existing layout of their plants to meet the new flow requirements,” said the official cited above.
Lobby groups, including Laghu Udyog Bharati, which represents 2,000 MSME pharmaceutical units, Federation of Pharma Entrepreneurs, a body representing 500 MSME drug firms and Himachal Drug Manufacturers Association have requested for an extension of the deadline, citing financial inability and the risk of widespread medicine shortages and unemployment.
On the other hand, at a 17 December meeting organized by the government's Pharmaceuticals Export Promotion Council of India (Pharmexcil), MSME drug firm associations pitched for a phased implementation strategy including a government-backed "crash course" to upskill their workforce, ensuring employees can handle the 300 new GMP rules covering Quality Management Systems (QMS), risk management, and waste handling without their operations taking a hit.
The government's move on the quality norms comes in the backdrop of India’s reputation as the ‘Pharmacy of the World’ taking a hit due to a tarnished global safety record on account of deaths of children in Uzbekistan, Gambia, Cameroon and India linked to cough syrups manufactured by Indian firms.
In view of such incidents, the Central Drugs Standard Control Organization (CDSCO), along with state regulators, has initiated risk-based inspections. Since December 2022, over 960 premises have been inspected. Following these checks, regulators took action against 860 firms by issuing show cause notices, stopping production, and cancelling licenses after finding over 3,000 drug samples to be of substandard quality.
In December 2023, the government had amended the Drugs Rules 1945, revising Schedule M to mandate stricter quality control, equipment standards, and premises requirements. While 2,000 large manufacturers, with turnovers exceeding ₹250 crore, complied with the revised GMP guidelines by June 2024, the smaller firms were given until 31 December 2025, to upgrade their systems.
This is a shift towards a more robust QMS that places greater responsibility on senior management for quality risk management, introduces mandatory self-audits, and sets stricter protocols for product recalls.
Queries emailed to the spokespersons for the health and family welfare ministry and the Drugs Controller General of India on Friday remained unanswered.
Health experts say quality compliance is non-negotiable for global trust. Dr Rajeev Jayadevan, public health expert and former president of the Indian Medical Association (IMA), Cochin chapter, said that standards cannot be compromised.
“Medicines made in India are used globally, making stringent quality standards a necessity. When a doctor prescribes a medicine, we assume quality, yet this isn't always true as the same drug is made by companies with varying standards," Dr Jayadevan said. "Recent tragedies linked to cough syrups have flagged this gap. Just as hospitals eventually adopted NABH accreditation despite initial resistance, pharma companies must adopt GMP. Once unavoidable, patients will demand it. In the long run, this will raise the overall quality and global credibility of Indian pharmaceutical products.”
India's pharmaceutical industry is ranked third globally by volume and 14th by value, and it supplies 20% of the world's generic medicines and 60% of its vaccines to over 200 countries.
Big challenges for small firms
The proposed shift from a guideline-based system to a rigid, rule-based regime means non-compliance can lead to criminal prosecution. Also, the new requirement to manage over 300 new operating procedures has thrown up the challenge of a significant shortage of skilled personnel capable of handling such complex documentation.
While hiring is strictly regulated—candidates typically need to have degrees in B.Pharma, M.Sc. or microbiology and require state drug authority verification for technical roles—small firms also struggle with retention.
“Small firms effectively act as training grounds, bearing the cost of upskilling employees who then migrate to larger corporate firms," a SME drug maker who did not want to be named. “Without government-standardized training courses to constantly replenish this talent pool, the ecosystem is unsustainable.”
“While the government defines MSMEs as having turnover up to ₹250 crore, but most pharma SMEs are below ₹50 crore and cannot afford the necessary investment required for infrastructure upgrades," said another SME firm official requesting anonymity. “Furthermore, the intensified documentation requirements have effectively doubled the salary bill of the factory without increasing turnover.”
The Pharmaceuticals Technology Upgradation Scheme launched last year offers pharmaceutical companies up to ₹2 crore to modernize their facilities. A total of 192 applications has been approved, with a total sanctioned amount of ₹181.59 crore.
Manufacturers are requesting the government for “phase-wise implementation” and genuine handholding to prevent supply-chain disruptions.
Dr Rajesh Gupta, national head of pharma wing of the Laghu Udyog Bharati said, “We are demanding an extension for compliances. Pharmaceutical manufacturing cannot be treated like other trades. The new rules involve over 300 complex standard operating procedures that require a specialized workforce,” he said. "Revised Schedule M is rule-based. If you lapse in anything, there are provisions for criminal action.”
Gupta highlighted a severe shortage of skilled workers as a primary hurdle. "Right now, the major shortage is of skilled workforce availability. The problem is that needful training is lacking. Unlike large corporations that can afford extensive internal training, small firms need government support. SMEs need hand-holding from the government via institutes like the National Institute of Pharmaceutical Education and Research (NIPER) or other academic organizations connected with the CDSCO.”
Harish Jain, president of the Federation of Pharma Entrepreneurs, also said the association is seeking an extension so that its member companies can fulfill the GMP requirements.
Large pharmaceutical companies that export to strictly regulated markets such as the US, EU, and the UK are, however, aligned with the government's deadline for the mandate.
Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance, representing 23 large pharma companies, including Sun Pharma and Cipla, said the new quality mandate is vital for the sector's future. “Aligning with globally accepted good manufacturing practices (GMP) will enhance patient safety, strengthen trust in Indian medicines, and facilitate deeper integration with global supply chains,” Jain said. “Quality is the fundamental license to operate in healthcare. The revised Schedule M reinforces that maintaining high manufacturing standards is a continuous journey and important for patient welfare.”
Mid-size firms also see the long-term benefits, even if the transition is tough. Parag Bhatia, director of Laborate Pharmaceuticals, said the new rules would bring much-needed uniformity. “The intent of GMP implementation is to strengthen quality systems, improve process consistency, and ensure patient safety across the value chain. while non-compliance carries financial and operational risks," he said adding that the transition is key to long-term competitiveness that will help align domestic practices with global regulatory expectations.