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Govt working on plan to raise API production to cut Chinese dependence: Comm Min report

:  October 10, 2018

New Delhi: The government is working on a road map to increase production of bulk drugs in the country with a view to reduce import dependence of the raw materials for pharma sector from China, a commerce ministry report said.

Over-dependence of Indian pharma industry on imported raw materials from China to meet the growing requirements of drug formulations is a cause of concern for the industry and policy makers, it added.

About 75 per cent of the active pharmaceutical ingredients (APIs) used in the formulations of National List of Essential Medicines are sourced from China.

In 2017, India imported APIs worth USD 2.5 billion from the neighbouring country.

"In a bid to reduce India's dependence on China for APIs, the chemicals and fertiliser ministry has joined hands with other ministries to draw a road map for increasing their production in the country.

"This initiative of the government will go a long way in supporting the domestic industry with necessary emphasis on strengthening and expanding production," the report 'Sino-Indian Trade - A perspective' - said.

The report has mainly focused on reasons for increasing trade deficit of India with China, which has touched USD 63 billion in 2017-18 and ways to reduce this gap.

It has also suggested that there is a need to design and implement narrowly targeted industrial policy, focusing on strategic and infant industries as a pro-active response to China's strategic industrial policy.

"There is a need to thoroughly screen and, where necessary, prohibit foreign takeovers especially in critical sectors like pharma, engineering and software companies, on national considerations," the report said.

Further, it stated that the ongoing retaliatory tariffs provide a window of opportunity for enhancing India's exports to China.

The US has hiked duties on several products being imported from China.

The major items, being exported from India, include copper and its cathodes, petroleum products, iron ore, textiles, castor oil, steel, polyethylene, diamonds and human hair.

Most of India's exports to China has been of primary goods and raw materials, while imports have been mainly intermediate and finished goods.

However, it added that too many barriers to Chinese imports will often harm Indian consumers through higher prices for final goods.

In addition, it said, Indian manufacturers may end up paying more for intermediate goods, which would reduce the competitiveness of their final goods in the US and other overseas markets.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.