Trade Watch- Quarterly (January - March [Q4] FY26)

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1Trade Watch  Jan-Mar (Q4) FY’2025-26
QUARTERLY
TRADE WATCH
THEMATIC ANALYSIS:
PHARMACEUTICAL TRADE
Jan-Mar (Q4) FY’2025-26

TRADE WATCH QUARTERLY, Quarterly Report for the FY’2025-26
Copyright@ NITI Aayog, 2026
Published: June, 2026
NITI Aayog
Government of India
Sansad Marg, New Delhi-110001, India

Jan-Mar (Q4) FY’2025-26
TRADE WATCH
QUARTERLY

1Trade Watch Jan-Mar (Q4) FY’2025-26
ADVISORY BOARD
S. No.Board Member Affiliation
1 Harsha Vardhana Singh Former Deputy Director, WTO
2 Santosh Kumar Sarangi
Former Additional Secretary & Director
General, DGFT
3 Pravin Krishna Professor, Johns Hopkins University
4 Rupa Chanda Director, UNESCAP
5 Deepak Mishra Director and Chief Executive, ICRIER
6 Rakesh Mohan Joshi Professor and Vice Chancellor, IIFT, Delhi
7 Arpita Mukherjee Professor, ICRIER
8 James J. Nedumpara
Professor and Head, Centre for Trade and
Investment Law (CTIL)
9 Pritam Banerjee
Professor and Head, Centre for WTO
Studies
10 C Veeramani Director, Centre for Development Studies
11 Sanjay Kathuria Visiting Senior Fellow, CSEP
12 Biswajit Nag Professor, IIFT
13 Debashis Chakraborty Professor, IIFT, Kolkata
14 Pranjul Bhandari Chief India Economist, HSBC
15 Ashwani Bishnoi
Faculty and Chairperson,
Department of Economics, GJUS&T Hisar
16 Bhavesh Garg Faculty, IIT Ropar

2Trade Watch Jan-Mar (Q4) FY’2025-26
EXECUTIVE SUMMARY
Global trade conditions have been challenging in recent quarters with continued
uncertainty surrounding trade policies, investment flows, and supply chains weighing
on economic activity. Amidst this, India’s trade remained broadly stable, with total
merchandise and services trade expanding by 5.4% during April–March FY’2025-26 to
reach $1.84 trillion. In Q4 FY’2025–26, the composition of India’s top exports remained
largely unchanged, led by electrical machinery, mineral fuels, and machinery and
boilers. On the import side, the basket was also broadly stable, with fertilisers replacing
aircraft and parts among the leading imported commodities.
Trade patterns reflected a growing orientation towards Asia, with export growth
concentrated in Hong Kong, Singapore, and China, while shipments to key traditional
markets such as the United States, UAE, and the United Kingdom moderated. On
the import side, strong growth was also recorded from Switzerland and Hong Kong,
driven by rising imports of precious metals, electronics, and industrial inputs.
India’s services exports have grown at a CAGR of 10.3% over the past decade,
substantially outpacing the global growth of leading countries. This has increased
India’s share in world services exports to 4.3% in 2025. A closer look at India’s software
and IT-enabled services exports shows that they continue to be dominated by
business process outsourcing (BPO) and support services, which accounted for 63.5%
of software services exports in 2024-25. Geographically, advanced economies remain
the principal markets, with North America accounting for over half of India’s exports,
though its share has been moderating over time. Europe’s share has increased to
33%, indicating greater diversification of demand for Indian digital, consulting, and
enterprise support services.
The thematic focus of this quarter’s edition is India’s API and pharmaceutical trade.
Global pharmaceutical and API import demand is valued at approximately $1.3
trillion (tn), including $261.2 billion (bn) in Active Pharmaceutical Ingredients (APIs)
for 2025. India’s pharmaceutical sector has emerged as a strategic pillar of the
economy, supported by a strong manufacturing base, global competitiveness in
generic medicines, and growing integration into international healthcare supply
chains. The industry contributes over 1.7% to India’s GDP
1
, 7.2% of manufacturing GVA
2
,
supports approximately 2.7 million(mn) livelihoods, and exported pharmaceutical and
API products worth nearly $35.8 bn. While India remains one of the world’s largest
suppliers of generic medicines and a major provider of vaccines and essential drugs
3
,
its global export share in pharmaceuticals and API remains modest at 2.8%, indicating
scope for expansion amid rising global demand for medicines, biologics, and speciality
therapeutics.
India’s comparative advantage remains concentrated in formulations, particularly retail
medicaments and generic drugs, where it remains highly competitive even in regulated
markets such as the United States and Europe. However, the global pharmaceutical
landscape has increasingly shifted towards high-value segments such as biologics,
vaccines, immunologicals, and advanced therapeutics, where India’s export presence
1 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2250771&reg=48&lang=2
2 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2161192&reg=3&lang=2
3 https://www.pib.gov.in/PressReleasePage.aspx?PRID=1932026&reg=48&lang=2

3Trade Watch Jan-Mar (Q4) FY’2025-26
remains limited. Despite being a leading vaccine manufacturer by volume, India
captures only a small share of global value in biologics and immunological products,
reflecting gaps in innovation capabilities, R&D intensity, and advanced manufacturing
infrastructure.
In Active Pharmaceutical Ingredients (APIs), India has strengthened its position in
several specialised chemical intermediates and antibiotics, but continues to face
dependence on imported raw materials and intermediates, particularly from China.
Although the sector’s growing participation in global value chains is evident from
rising domestic value addition. While India has successfully moved up the value chain
through formulations, complex generics, and speciality products, strengthening
domestic capabilities in critical APIs, key starting materials, and biotechnology
inputs remains essential to improving supply chain resilience and reducing import
dependence.
Telangana, Gujarat, and Maharashtra have emerged as the key pillars of India’s
pharmaceutical industry, driving a significant share of the country’s production,
exports, and integration into global value chains. Their success is rooted in strong
manufacturing ecosystems, cluster-based development, globally competitive firms,
and supportive policy frameworks. Telangana has developed as a major life sciences
and vaccine hub, Gujarat has leveraged its strong chemical-pharmaceutical base
and export orientation, while Maharashtra combines large-scale manufacturing with
strong R&D capabilities. Together, these states illustrate how industrial clusters, leading
firms, and proactive policy support can enhance pharmaceutical competitiveness
and export growth.
Looking ahead, the sustained expansion of India’s pharmaceutical sector will pivot
decisively upon scaling up strategic investments in frontier research and development
(R&D), complex biologics, and advanced therapeutics. International precedent from
advanced economies such as Germany, Switzerland, and China underscores the critical
imperative to foster integrated innovation ecosystems, specialised industrial clusters,
and agile regulatory frameworks. As global market dynamics rapidly shift toward
high-value, knowledge-intensive biopharmaceuticals, India must complement its
traditional manufacturing scale with deep-tech innovation and collaborative research
to systematically graduate from the ‘Pharmacy of the World’ to an undisputed global
capital for pharmaceutical innovation.

4Trade Watch Jan-Mar (Q4) FY’2025-26
HIGHLIGHTS
1. India’s total merchandise and services trade grew steadily at 5.4% year-on-year
(y-o-y) during April–March FY’2025-26. Trade reached $1.84 trillion (tn), with exports
growing 4.2% and imports 6.5% during the same period.
2. Merchandise exports during Q4 FY‘2025-26 declined by 2.8%, reaching $112.03 bn,
while imports rose by 11.9% to $195.5 bn. Services exports increased by 9% to $111.1
bn, and imports rose by 4.1% to $50.7 bn.
3. Export composition remained unchanged as compared to Q3 FY’2025-26. Import
composition was stable, with fertilisers replaced by aircraft, spacecraft, and their
parts. Directionally, Hong Kong entered the top 10 export destinations, with the
strongest growth of 54%, while Switzerland recorded the sharpest import growth
of 48.1%, driven by high imports of gold and medical and scientific instruments.
4. India remained the world’s eighth-largest services exporter in 2025. Services
exports registered a CAGR of 10.3% from 2015 to 2025, higher than the global
average growth rate of 6.6%. “Other services” emerged as the largest component
of India’s services exports, while Telecom and IT services remained the second-
largest category in 2025.
5. The global pharmaceutical and APIs world demand collectively accounts for $1.3 tn,
of which formulations represent the larger segment at $961.8 bn (~75%), followed
by APIs accounting for $261.2 bn.
6. Retail medicaments and formulated drugs (HS 3004), the leading product under
formulations accounted for 55.6% of global pharmaceutical imports valued at
$571.5 bn. India’s export value was $22.6 bn in this category, capturing a 4.0% share
in global import demand.
7. The second-largest under the formulations category, blood products, vaccines,
and immunologicals (HS 3002), emerged as the fastest-growing product globally,
with imports reaching $390.2 bn to which India’s exports remained limited at $2.2
bn, corresponding to a global export share of 0.6%.
8. India’s exports were at $10.0 bn translating to a share of 3.8% in the global demand
for API. Hormones and Analogues (HS 2937) account for 37.5% of global API demand,
with global imports reaching $97.8 bn in 2025, while India’s share in global imports
remains at 0.3%.
9. SPS measures, TBTs, and licensing and quality-control requirements account
for 95% of non-tariff measures in developed markets, while TBTs, export-related
measures, and SPS measures constitute 80% of measures in developing markets
for pharmaceutical exports from India to the selected leading destinations.
10. India’s life sciences innovation ecosystem is strengthening rapidly, with patent
filings rising eightfold from 440 in 2013 to 3,576 in 2023, placing India among
the world’s top ten patent filers in medical technology, biotechnology, and
pharmaceuticals.
11. India’s limited R&D intensity and innovation ecosystem are constraining its entry
into high-value pharmaceutical segments such as biologics, biosimilars, and
advanced therapies. R&D spending by Indian pharmaceutical firms remains

5Trade Watch Jan-Mar (Q4) FY’2025-26
around 7% of sales compared to 15–20% globally, while weak industry-academia
linkages, and prolonged patent approvals continue to impede the development
and commercialisation of research-intensive products.
12. Market access remains a key constraint for India’s pharmaceutical exports
in developed markets. Lengthy product registration processes, duplicative
inspections, stringent documentation requirements, and limited recognition of
foreign regulatory approvals increase compliance costs and delay market entry.
These challenges are further compounded by rising environmental compliance
obligations and the limited incorporation of enforceable pharmaceutical market-
access provisions in trade agreements.
13. Accelerate pharmaceutical innovation by improving transparency in the regulatory
framework and introduce time-bound patent opposition and grant procedures.
This may improve monitoring of competing applications, enhance IP certainty, and
strengthen India’s competitiveness in biologics, biosimilars, and other innovation-
driven pharmaceutical segments.
14. The top five API categories account for 84% of imports and China supplies 66–86%
of these products even in 2025, strengthening fermentation-based manufacturing,
KSM production, and other upstream capabilities should be complemented by
efforts to diversify India’s import sourcing.
15. Develop a model pharmaceutical chapter for future FTAs that may serve as a
blueprint for bilateral and multilateral trade negotiations. The chapter should
incorporate provisions on regulatory reliance, GMP inspection, product registration,
standards harmonisation, and transparent dispute-resolution mechanisms to
reduce compliance costs and enhance regulatory predictability across key export
markets.
16. Shift environmental compliance from a firm-level burden to a shared infrastructure
model through increased number of bulk drug parks integrating common effluent
treatment, zero liquid discharge, and solvent recovery systems that may reduce
costs, improve scale efficiencies, and enable Indian pharmaceutical manufacturers
to meet evolving global sustainability requirements.

6Trade Watch Jan-Mar (Q4) FY’2025-26
CONTENTS
A. India’s Trade Analysis 9
1. Merchandise and Services Analysis 9
2. Compositional Analysis 10
3. Trade Direction 12
4. Regional Analysis 14
5. Merchandise Trade with FTA Partners 15
6. India’s Trade Dynamics and Market Diversification in FY 2025-26 17
7. Services Export Performance 19
B. Thematic Analysis: Pharmaceutical Trade 24
1. Overview 24
2. Mapping the Global Trade Profile in Pharmaceutical Products 25
3. Mapping the Global Trade Profile in Active Pharmaceutical
Ingredients (API), 2025 27
4. Change in share in Pharmaceutical Exports over the years (2015-25) 28
5. Change in share in Active Pharmaceutical Ingredients Exports
over the years (2015-25) 29
6. Mapping Global Demand and India’s Export Footprint in
Key Pharmaceutical Exports 32
7. Mapping Global Demand and India’s Export Footprint
in Key Active Pharmaceutical Ingredients (API) Exports 33
8. Non-tariff measures in Pharmaceutical Trade faced by India 35
9. Assessing Foreign Investment Trends in Drugs and Pharmaceutical Sector 39
10. India’s Participation in Value Chains for Pharmaceutical Exports 40
11. Innovation and Research and Development (R&D) in the
Pharmaceutical Sector 42
12. Recent Developments in India’s Trade Policies: Key Updates for the
Pharmaceutical Sector 44
13. Industry Insights on Key Constraints Impacting India’s
Pharmaceutical Trade Performance 46
14. Way Forward 48
C. Policy and Geopolitical Highlights 52
1. Global Trade–Related Policy Updates 52
2. India’s Trade Policy Developments 52
3. Commodity Price Trends 53

7Trade Watch Jan-Mar (Q4) FY’2025-26
A.
INDIA’S TRADE
ANALYSIS

8Trade Watch Jan-Mar (Q4) FY2025-26
A. India’s Trade Analysis
Amid evolving global challenges, trade policy uncertainty has emerged as a key source
of risk. Global growth is expected to slow in 2026 due to continued rising uncertainty
in trade, investment, and supply chains. UNCTAD projects the world merchandise
trade growth rate to fall from 4.7% in 2025 to between 1.5% and 2.5% for 2026
4
.
Against this challenging external environment, India’s total trade (merchandise and
services) performance recorded a 5.4% y-o-y increase during April–March FY’2025-
26, supported by growth in both exports and imports. During this period, total trade
reached $1.84 tn, compared with $1.74 tn in the same period last year. India’s total
exports witnessed a growth of 4.2%, reaching $860.1 bn, while imports grew by 6.5%,
reaching $979.4 bn between April–March FY’2025-26 (Fig 1).
Fig 1: Total Trade performance between Apr-Mar FY’2025-265.4%
4.2% 6.5%
26.0%
0%
10%
20%
30%
-500
0
500
1000
1500
2000
Total TradeExport Import Trade
Balance
$Billion
Apr - March 2025 Apr - Mar 2026 Change % (RHS)
Source: Department of Commerce, MoC&I, GOI
1. Merchandise and Services Analysis
In March 2026, both merchandise exports and imports recorded declines. Merchandise
exports declined by 7.4%, reaching $38.9 bn, while imports fell by 6.0%, reaching $59.9
bn (Fig 2). For the full quarter, merchandise exports declined by 2.8% y-o-y to $112.03 bn,
while imports rose by 11.9%, reaching $195.5 bn (Fig 3). This resulted in a merchandise
trade deficit of $83.53 bn for the quarter.
-7.4%
-6.0%
-3.3%
-8%
-6%
-4%
-2%
0%
-30
-20
-10
0
10
20
30
40
50
60
70
Mar (EX) Mar (IM)Trade Balance
$Billion
FY 2025 FY 2026 y-o-y % (RHS)
-2.8%
11.9%
40.3%
-10%
0%
10%
20%
30%
40%
50%
-100
0
100
200
300
Q4 (EX) Q4 (IM) Trade
Balance
$Billion
FY 2025 FY 2026
Fig 2: Merchandise Trade (Monthly) Fig 3: Merchandise Trade (Quarterly)
Source: Department of Commerce, MoC&I, GOI
4 https://unctad.org/publication/trade-and-development-foresights-2026-global-economy-faces-geopolitical-challenge

9Trade Watch Jan-Mar (Q4) FY’2025-26
India’s services exports for March 2026 stood at $38.2 bn, registering a y-o-y growth
of 7.3%, while services imports declined by 1.5% reaching $17.2 bn (Fig 4). During Q4
FY’2025-26, services exports witnessed a robust y-o-y expansion of 9%, reaching $111.1
bn, and services imports rose moderately by 4.1% to $50.7 bn, resulting in a services
trade surplus of $60.4 bn (Fig 5). The combined balance of trade in goods and services
recorded a deficit of $23.1 bn for this quarter, the second lowest deficit for the financial
year FY’2025-26.
Figure 4: Services Trade (Monthly) Figure 5: Services Trade (Quarterly)
Source: Department of Commerce, MoC&I, GOI
2. Compositional Analysis
2.1 Merchandise Exports
In Q4 FY’2025-26, the leading
5
products of exports amounted to $70.6 bn, marking a
y-o-y decline of 3%. The top 3 commodities remained electrical machinery and parts
(12.8% share), mineral and related fuels (11.4%), and nuclear reactors (8.3%). The leading
commodities remained the same as the previous quarter, with five commodities
recording a positive y-o-y growth in Q4 FY’2025-26 (Fig 6).
Among the leading commodities, iron and steel and vehicle and their parts recorded
particularly strong y-o-y growth rates. Vehicle exports increased, driven by higher
shipments of motor cars whereas iron and steel exports grew by 18.4% on account of
increased demand for ferro-alloys. In contrast, exports of mineral fuels declined, with
export volumes falling from 4,909 metric tonnes in January to 4,472 metric tonnes in
March, as reported by the Petroleum Planning and Analysis Cell
6
. Exports of natural
and cultured pearls also declined, primarily due to lower exports of cut and polished
diamonds and gold jewellery. This contraction was likely due to subdued demand
in the US and disruptions arising from the West Asia conflict, both of which are key
markets for India’s gems and jewellery industry.
5 Leading commodities are the top ten commodities with the highest value share in exports in the current quarter.
6 https://ppac.gov.in/import-export

10Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 6: Composition and Growth of Exports12.8%(2.0%)
11.4%(-12.3%)
8.3%(4.9%)
6.3%(-17.0%)
5.9%(14.2%)
5.7%(-10.6%)
5.0%(5.6%)
3.0%(-10.8%)
2.4%(18.4%)
2.3%(-5.6%)
0% 2% 4% 6% 8% 10% 12% 14% 16%
Electrical machinery & parts
Mineral & related fuels
Nuclear reactors, boilers & parts thereof
Natural, cultured pearls & precious stones
Vehicles other than railways & parts
Pharmaceutical products
Organic chemicals
Cereals
Iron and steel
Articles of iron or steel
Note: Y-o-y growth of the commodity in India’s export for this quarter is mentioned in parenthesis
Source: Department of Commerce, MoC&I, GOI
2.2 Merchandise Imports
In Q4 FY’2025-26, the leading
7
products of imports amounted to $155.2 bn, marking
a y-o-y increase of 13.0%. Imports continue to be led by mineral fuels (23.5% share),
natural and cultured pearls (17.6%), electrical machinery (14.5%), and nuclear reactors
(10.0%). Compared with the previous quarter, the composition largely remains the
same, with only fertilisers replacing aircraft, spacecraft, and their parts in the current
quarter. In terms of growth, six products recorded a positive y-o-y growth among the
leading commodities in the quarter (Fig 7).
Imports of natural and cultured pearls increased sharply by 82% y-o-y, rising from $18.8
bn to $34.3 bn, driven by strong demand for gold and silver as investment demand
outpaced domestic jewellery demand. India continued to remain a key driver of gold
demand for both consumption and investment purposes, ranking second globally
in both jewellery and investment segments
8
. Imports of animal and vegetable fats
recorded a y-o-y growth of 24%, supported by higher demand for crude palm oil.
7 Leading commodities are the top ten commodities with the highest value share in imports in the current quarter.
8 https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-india-focus-q1-2026

11Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 7: Composition and Growth of Imports23.5%(-11.0%)
17.6%(82%)
14.5%(17.7%)
10.0%(20.6%)
3.1%(-5.3%)
2.7%(4.5%)
2.4%(24.1%)
2.1%(16.3%)
1.8%(-16.8%)
1.7%(-6.3%)
0% 5% 10% 15% 20% 25% 30% 35%
Mineral & related fuels
Natural, cultured pearls & precious stones
Electrical machinery & parts
Nuclear reactors, boilers & parts thereof
Organic chemicals
Plastic & articles thereof
Animal or Vegetable fats and oils
Optical/ Medical/Surgical Instruments & parts
Iron and steel
Aircraft, spacecraft and parts thereof
Note: y-o-y growth of the commodity in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
3. Trade Direction
3.1 Merchandise Exports
India’s exports to its leading
9
markets contributed to 50.3% of total exports in Q4
FY’2025-26, amounting to $56.4bn. Hong Kong entered the top ten export destinations
during the quarter, replacing Spain in the previous quarter; the remaining destinations
remain the same as the previous quarter.
Fig 8: India’s exports to major destinations-40%
-20%
0%
20%
40%
60%
0
4
8
12
16
20
24
28
$Billion
Q4 FY25 Q4 FY26 % Y-o-Y Growth Q4 (RHS) % share in India's exports Q4'FY26 (RHS)
Source: Department of Commerce, MoC&I, GOI
Among the top ten export destinations, India recorded positive y-o-y growth in Q4
FY’2025-26 across four markets, with the strongest y-o-y export growth observed in
9 Leading markets are the top ten markets with the highest value share in exports in the current quarter.

12Trade WatchB Jan-Mar (Q4) FY2025-26
Hong Kong (54%), although exports to the destination remain modest at $1.61 bn.
Export growth to Hong Kong was driven by strong demand, particularly for silver
jewellery, electronics, and processed stones. Other destinations posting strong growth
include Singapore, where exports expanded by 48.8%, driven by higher exports of
petroleum products, electric machinery and equipment, and ships, boats, and floating
structures
10
. Exports to China during the quarter were driven by higher shipments
of petroleum products, engineering goods, minerals, cereals, and handicrafts
11
. The
sharpest declines in exports were to the Netherlands and Bangladesh, at 28% and
21%, respectively. Meanwhile, the USA, UAE, UK, and Saudi Arabia recorded declines
of 18.7%, 12.7%, 8.9%, and 16.5%, respectively. The decline in exports to the Netherlands
was primarily driven by a sharp drop in petroleum products, along with global logistics
costs, shipping rerouting challenges, and cautious European demand weighing
heavily on shipments
12
(Fig 8).
3.2 Merchandise Imports
India’s share of imports from its leading
13
markets accounted for around 57.2% of
total imports in Q4 FY’2025-26, amounting to $111.8 bn. China, UAE and USA continue
to remain the major markets, with Switzerland recording the sharpest y-o-y import
growth of 48.1%, followed by Hong Kong of 25.8% and China with 18%.
Fig 9: India’s imports from major sources-20%
0%
20%
40%
60%
0
10
20
30
40
$Billion
Q4 FY25 Q4 FY26 % Y-o-Y Growth Q4 (RHS) % share in India's imports Q4'FY26 (RHS)
Source: Department of Commerce, MoC&I, GOI
Thailand and Hong Kong entered the top ten import markets during the quarter
replacing Iraq and Japan in the previous quarter. Rising imports from Hong Kong
were primarily driven by a surge in demand for precious stones and metals, whereas
the increase in imports from Switzerland was mainly driven by higher imports of gold,
medical and scientific instruments, and engineering items
14
(Fig 9).
10 https://oec.world/en/profile/bilateral-country/ind/partner/sgp
11 https://www.china-briefing.com/china-outbound-news/india-export-import-trade-data-fy-2025-26
12 https://dea.gov.in/files/monthly_economic_report_documents/File_MER%20March%202026.pdf
13 Leading markets are the top ten markets with the highest value share in imports in the current quarter.
14 https://oec.world/en/profile/bilateral-country/ind/partner/che

13Trade Watch Jan-Mar (Q4) FY’2025-26
4. Regional Analysis
4.1 Merchandise Exports
India’s exports to its top 10 leading
15
export regions accounted for nearly 89.3% of total
exports in Q4 FY’2025-26. Among these, positive growth was recorded in four regions,
with ASEAN and East Africa emerging as the fastest-growing regions during the
quarter. Exports to ASEAN grew by 31.6%, while East Africa grew by 25.1%. Northeast
Asia also recorded strong growth of 24.4%, supported largely by higher exports to
China and Hong Kong. The increase in exports to these regions was driven by stronger
shipments of petroleum products, electrical machinery, copper, pearls, and cotton.
Latin America also witnessed moderate growth of 5.2%, indicating expanding trade
engagement with emerging markets. The sharpest y-o-y decline in growth was
recorded in North America, where exports fell by 16%, followed by West Asia-GCC
(-15.7%) and EU countries (-4.9%). Exports to Other European Countries and West Africa
also declined during the quarter. The fall in exports to North America and West Asia-
GCC was primarily linked to weaker petroleum product shipments and softer demand
for key sectors such as gems and jewellery, textiles, and engineering goods (Fig 10).
Fig 10: Region-Wise Export Composition and Growth 21.7%(-15.9%)
15.7%(-4.8%)
11.3%(-15.7%)
10.2%(24.4%)
9.8%(31.5%)
6.1%(-1.8%)
4.3%(-8.3%)
3.6%(5.2%)
3.4%(25.1%)
3.1%(-4.8%)
0% 5% 10% 15% 20% 25%
North America
EU Countries
West Asia- GCC
NE Asia
ASEAN
South Asia
Other European
Countries
Latin America
East Africa
West Africa
Note: y-o-y growth of the region in India’s exports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
4.2 Merchandise Imports
India’s imports from its leading
16
regions accounted for nearly 91% of total imports
in Q4 FY’2025-26. Among these, six regions recorded positive y-o-y growth during
the quarter. Northeast (NE) Asia remained India’s largest import source, accounting
for around 28% of total imports, with imports rising by 18.2% during the quarter.
The increase was driven by higher imports of electronics, machinery, chemicals,
and intermediate goods. ASEAN also registered strong growth of 13%, supported by
increased imports of electronic components, machinery, and industrial inputs.15 Leading regions are the top ten regions with the highest value share in exports in the current quarter.
16 Leading regions are the top ten regions with the highest value share in imports in the current quarter.

14Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 11: Region-Wise Import Composition and Growth27.6%(18.2%)
15.0%(-11.1%)
12.5%(13.0%)
7.7%(22.3%)
7.6%(-5.7%)
5.4%(-26.4%)
5.4%(78.6%)
3.9%(356.1%)
3.0%(-26.0%)
2.6%(75.8%)
0% 10% 20% 30%
NE Asia
West Asia- GCC
ASEAN
North America
EU Countries
Other CIS Countries
Latin America
European Free Trade Associatipn (EFTA)
Other West Asia
Other European Countries
Note: y-o-y growth of the region in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
The strongest growth was observed in the European Free Trade Association (EFTA)
region, where imports surged by over 356% surging from $1.66 bn to $7.58 bn followed
by Latin America by 78.6%, from $5.91 bn to $7.58 bn and Other European Countries
by 75.1%, from $2.88 bn to $5.05 bn, during the same quarter in the previous year.
The sharp rise in imports from EFTA was largely driven by higher gold imports,
particularly from Switzerland, as well as increased imports of precision instruments
and engineering products. Similarly, the growth in imports from Latin America was
supported by stronger shipments of crude oil, minerals, and precious stones. In
contrast, contractions were recorded across four regions. Imports from Other CIS
Countries and Other West Asian countries declined sharply by around 26% each, while
West Asia-GCC and EU Countries also witnessed moderation during the quarter. The
decline in imports from West Asia-GCC was largely driven by supply-side disruptions in
regional energy markets, including shipping and logistical constraints, which affected
crude oil and petroleum inflows amid easing global energy prices (Fig 11).
5. Merchandise Trade with FTA Partners
India’s trade with its Free Trade Agreement (FTA) partner countries remained strong
in Q4 FY’2025-26, with exports rising from $39.2 bn to $42.4 bn, reflecting 8% y-o-y
growth. Imports from FTA partners also increased by 4%, reaching $70.9 bn during
the quarter. ASEAN and the UAE remained India’s largest FTA trade partners, together
accounting for a substantial share of both exports and imports.

15Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 12: Exports- FTA Partners-40%
-20%
0%
20%
40%
60%
0
2
4
6
8
10
12
$Billion
4 ) < 4 ) < \ R \ F K D Q J H L Q 4 ) < 5 + 6
Source: Department of Commerce, MoC&I, GOI
On the export side, strong growth was recorded in Singapore (48.8%), Sri Lanka (54.6%),
Malaysia (35.7%), and ASEAN as a bloc (31.6%). The increase was largely driven by higher
exports of petroleum products, electronics, engineering goods, and agricultural
products. Exports to Thailand remained broadly stable, while Mauritius and Bhutan
also recorded moderate growth. In contrast, exports contracted to the UAE (-12.7%),
Australia (-18.2%), Japan (-5.1%), South Korea (-0.7%), and Nepal (-0.5%). The decline in
exports to the UAE and Australia was primarily linked to weaker petroleum product
shipments and softer demand in sectors such as gems and jewellery, as well as
engineering goods (Fig 12).
Fig 13: Imports- FTA Partners-40%
-20%
0%
20%
40%
0
5
10
15
20
25
30
$Billion
4 ) < 4 ) < < R < 4 * U R Z W K 5 + 6
Source: Department of Commerce, MoC&I, GOI
On the import side, imports from ASEAN grew by 13%, supported by stronger inflows
of electronics, machinery, and intermediate goods. Imports from Malaysia (32.6%),
Sri Lanka (34.5%), Japan (12.4%), Thailand (11.2%), and Singapore (10.3%) also recorded
healthy growth, indicating deepening regional supply-chain integration. Imports from
the UAE declined by 18.7%, largely reflecting lower crude oil and petroleum imports
during the quarter. India’s FTAs continue to support trade integration, particularly
with Asian economies (Fig 13).

16Trade Watch Jan-Mar (Q4) FY’2025-26
6. India’s Trade Dynamics and Market Diversification in FY’2025-26
As FY’2025-26 was marked by elevated geopolitical risks, disruptions in global
shipping routes, and increasing trade policy uncertainty, it is important to assess
not only the overall performance of India’s external sector but also the evolving
composition and direction of its trade flows. An examination of India’s trade dynamics
provides insights into the resilience of exports and imports, the role of services in
supporting external stability, and the extent of India’s trade diversification amid a
challenging global environment.
The current account remained broadly stable, supported by robust services exports,
modest merchandise exports, diversified trade linkages, and buoyant remittance
inflows. While the capital account experienced bouts of volatility, reflected in portfolio
outflows and currency pressures amid tightening global financial conditions, these
shocks were effectively absorbed through adequate foreign exchange reserves and
prudent macroeconomic management. Consequently, the balance of payments
remained manageable, underscoring the economy’s ability to withstand external
shocks.
India’s trade balance remained in deficit throughout FY’2025-26, driven by a
persistently large merchandise trade deficit, although a strong and steadily
expanding services surplus provided significant support to the external sector. India’s
merchandise trade deficit, while elevated, demonstrated a meaningful correction in
Q4, narrowing from $91.8 bn in Q3 to $83.5 bn reflecting the economy’s growing
absorptive capacity for energy, electronics, and capital goods imports that underpin
India’s expanding industrial and infrastructure base. The improvement in Q4
underscores the resilience of India’s export engine in navigating global headwinds,
including elevated energy prices and freight cost pressures arising from Middle East-
linked shipping disruptions. Additionally, heightened trade policy uncertainty and
broader protectionist trends created headwinds for global trade and export growth.
In contrast, the services trade surplus increased consistently from $47.9 bn in Q1 to
$60.4 bn in Q4, reflecting robust performance in IT, business and professional services
exports. India’s trade deficit demonstrated resilience throughout the year, narrowing
from a peak of $37.1 bn in Q2 to $23.2 bn in Q4, reflecting a strong second-half export
recovery and improving trade-balance dynamics. Strong combined exports of goods
and services helped maintain the resilience of India’s external sector, underscoring
the increasingly important role of services exports in cushioning the merchandise
trade deficit and supporting overall external stability (Fig 14).

17Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 14: India’s Trade Balance in FY 2025-26-68.7
-88.0
-91.9
-83.5
47.9
50.9
57.5
60.4
-20.8
-37.1
-34.4
-23.2
-120
-80
-40
0
40
80
Q1 Q2 Q3 Q4
$ bn
Merchandise Balance Services Balance Total Trade Balance
Source: Department of Commerce, MoC&I, GOI
India’s trade concentration with its leading destinations declined over the past two
years, despite remaining relatively high. On the export side, the share of exports to the
leading destinations fell from 53.3% ($58.6 bn) in Q1 of FY’2024-25 to 50.4% ($56 bn) in
Q4 of FY’2025-26, a decline of 2.9%. Similarly, import concentration decreased more
sharply by 4%, from 61.2% ($106.2 bn) in Q1 of FY’2024-25 to 55.2% ($111.8) in Q4 FY’2025-
26. The decline in concentration suggests that India’s trade has been diversified over
the course of the year (Fig 15).
Fig 15: India’s Market Concentration on the Leading (Top 10) Partners53.3%
54.7%
50.4%
61.2%
62.2%
57.2%
40%
45%
50%
55%
60%
65%
Export Concentration Import Concentration
Source: Department of Commerce, MoC&I, GOI
Note: This includes merchandise exports and imports only
India’s trade policy response in FY’2025-26 encompassed several initiatives aimed
at navigating a challenging global trade environment characterised by rising
protectionism and supply-chain realignments. Among the key measures were the
acceleration of trade negotiations and conclusion of agreements with partners such as
the UK, Oman, and New Zealand, which expanded market access for sectors including

18Trade Watch Jan-Mar (Q4) FY’2025-26
textiles, pharmaceuticals, engineering goods, and gems and jewellery
17
.
The government also strengthened export competitiveness through measures such
as the Export Promotion Mission (EPM) and the liberalisation of duty-free import
schemes for export-oriented industries. These initiatives sought to reduce input costs,
support market diversification, and help exporters adapt to evolving tariff and non-
tariff barriers. Together, these efforts reflect India’s strategy of combining external
market access with domestic competitiveness enhancement to strengthen export
resilience and position itself as an alternative manufacturing and sourcing destination
in a reconfiguring global trade landscape
18
.
Alongside the strengthening of merchandise export competitiveness, services trade
has emerged as an increasingly important driver of India’s external sector performance.
Services export growth across a range of sectors has improved India’s global presence,
increased its share in world services trade, and provided an important source of
external sector strength.
7. Services Export Performance
India remained the world’s eighth-largest services exporter in 2025, retaining this
position since 2015, while also recording the fastest growth rates among major
global exporters. The services export growth rate has consistently outpaced that of
merchandise exports
19
. India’s services exports reached $421.2 bn in FY 2025-26, nearly
matching merchandise exports of $442.1 bn. This underscores the growing importance
of services as a key driver of India’s export earnings, external sector resilience, and
overall economic growth. India’s services exports increased from $156 bn in 2015 to
$416 bn in 2025, registering a CAGR of 10.3%, higher than the global average growth of
6.6% and ahead of leading exporters such as the United States (4.8%), United Kingdom
(6.5%) and Germany (7.0%). Consequently, India’s share in global services exports rose
from 3.1% in 2015 to 4.3% in 2025, reflecting increasing integration into global services
trade.
Fig 16: Composition of Services Exports, 2025 3.6%
16.0%
19.6%
2.4%
9.1%
14.9%
33.5%
0.9%
7.6%
7.3%
32.5%
49.4%
0.4%
2.0%
1.6%
1.6%
0.9%
9.4%
6.4%
0.7%
0% 10% 20% 30% 40% 50% 60%
Goods-related
Transport
Travel
Insurance and pension
Financial
Telecom and IT
Other services
Government goods
India's share in World's Service ImportShare in India's ExportShare in World's Service Imports
Source: UNCTAD
17 https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2233417&lang=2&reg=3
18 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2232079&reg=3&lang=1
19 https://www.epw.in/journal/2026/22/commentary/indias-services-exports.html

19Trade Watch Jan-Mar (Q4) FY’2025-26
Over the decade, traditional services such as transport and travel continued to account
for a large share of world services imports, together constituting nearly 36% in 2025,
although their relative importance moderated compared to 2015. At the same time,
digitally deliverable and knowledge-intensive services expanded rapidly. Telecom and
IT services increased their share in world services imports from 9.5% in 2015 to 14.9%
in 2025, while “other services,” comprising professional, business, technical, personal
and recreational, and management services, remained the single largest category
globally, accounting for one-third of world services imports (Fig 16). The high share of
Other Services underscores India’s transition to a global GCC hub, providing high-value
services in areas such as R&D, engineering design, analytics, finance, and professional
services.
Table 1: Comparison of Global Services Imports and India’s Export Performance for 2015 and 2025
2025 2015
Services Sub-
category
World
Service
Imports
($bn)
Share in
World's
Service
Imports
India's
Exports
($bn)
Share
in
India's
Export
World
Service
Imports
($bn)
Share in
World's
Service
Imports
India's
Exports
($bn)
Share
in
India's
Export
Total Services 9645.29 416.07 5084.00 156.28
Goods-related 345.49 3.6% 1.29 0.3% 167.52 3.3% 0.32 0.2%
Transport 1540.84 16.0% 31.47 7.6% 904.91 17.8% 14.329.2%
Travel 1893.96 19.6% 30.55 7.3% 1223.8224.1% 21.0113.4%
Insurance and
pension
235.17 2.4% 3.67 0.9% 121.93 2.4% 1.99 1.3%
Financial 873.50 9.1% 7.75 1.9% 463.50 9.1% 5.65 3.6%
Telecom and IT 1433.34 14.9% 135.2132.5%484.54 9.5% 55.1935.3%
Other services 3233.07 33.5% 205.5149.4%1642.5732.3% 57.2436.6%
Government
goods and
services
89.92 0.9% 0.63 0.2% 75.22 1.5% 0.56 0.4%
Source: UNCTAD
Over the past decade, global demand for services expanded substantially, with world
services imports increasing from $5.1 tn in 2015 to $9.6 tn in 2025. While other services,
travel and transport continued to account for almost three-fourths of global demand,
the composition of services trade shifted towards more knowledge-intensive activities.
In contrast, the share of travel services in global imports declined from 24.1% to 19.6%,
reflecting a gradual reorientation of global demand towards digitally deliverable and
business-oriented services (Table 1).
India’s services export basket evolved broadly in line with these global trends.
Services exports increased from $156 bn in 2015 to $416 bn in 2025, with growth
concentrated in telecommunications and IT services, as well as other services. Exports
of telecommunications and IT services more than doubled from $55 bn to $135 bn,
while exports of other services increased nearly fourfold from $57 bn to $206 bn.
Together, these two categories accounted for over 80% of India’s services exports in
2025, compared with around 72% in 2015, highlighting a growing specialisation in
knowledge-intensive and business services.

20Trade Watch Jan-Mar (Q4) FY’2025-26
At the same time, the relative importance of traditional services exports declined.
Travel services accounted for 13.4% of India’s services exports in 2015 but only 7.3%
in 2025, while the share of transport services fell from 9.2% to 7.6%. This suggests
that India’s export growth has increasingly been driven by sectors aligned with the
changing structure of global demand, particularly digitally deliverable and high-value
commercial services.
As the second-largest component of India’s services exports, software and IT-enabled
services (ITES) play a pivotal role in the country’s external sector and overall economic
performance. In this regard, the Reserve Bank of India (RBI) conducts an annual survey
of Indian enterprises that export computer software and Information Technology
Enabled Services (ITES/BPO) to assess the sector’s performance and composition.
Within the composition of the software services exports, the traditional back-office
and support functions continue to dominate, with “other BPO
20
services” increasing
their share to 63.5% in 2024-25. Finance, accounting, auditing and taxation services
remained relatively stable at around 12%, indicating sustained global demand for
specialised financial process management services. Conversely, relatively standardised,
lower-value-added activities such as medical transcription, document management,
content development and HR administration witnessed a decline in their export
shares over the decade.
Within engineering services exports, the composition also shifted. The shares of
embedded solutions and product design engineering moderated between 2014-15
and 2024-25, while industrial automation and enterprise asset management services
emerged as a growing segment (Fig 17).
Fig 17: Composition of Software Services Exports of India, 2014-15 and 2024-250.2%
0.5%
0.5%
0.5%
1.2%
2.7%
2.7%
5.7%
10.4%
12.3%
63.5%
0% 10%20%30%40%50%60%70%
Medical transcription and document
management
HR administration
Content development, management and
publishing
Industrial automation and enterprise asset
management
Supply chain and other management
services/logistics
Embedded solutions
Product design engineering
Business consulting services
Other engineering services
Finance, accounting auditing and taxation
Other BPO services
2024-25 2014-15
Source: RBI, Annual Survey
India’s export basket mirrored this structural transformation toward high-value
services. While transport and travel together accounted for over 22% of India’s services
exports in 2015, their combined share moderated to around 15% in 2025. In contrast,
20 Business Process Outsourcing services which include services such as animation and gaming, legal services, market
research, pharmaceutical and biotech etc

21Trade Watch Jan-Mar (Q4) FY’2025-26
digitally deliverable and knowledge-intensive categories gained prominence. “Other
services” emerged as the largest component of India’s services exports, increasing
from 36.6% of exports in 2015 to 49.4% in 2025, with India capturing 6.4% of world
imports in this segment. Telecom and IT services remained the second-largest
category, accounting for 32.5% of India’s services exports in 2025. Although its share in
India’s exports moderated marginally from 35.3% in 2015, India continued to maintain
a strong global position in the segment, supplying 9.4% of world telecom and IT
services imports.
The geographical distribution of India’s software and IT-enabled services exports also
reflects gradual diversification over the past decade, although advanced economies
continue to remain the dominant destination markets, particularly the USA and
Canada. Their share moderated to 54% in 2024-25, indicating a relative reduction in
concentration despite continuing to account for more than half of India’s IT and ITES
exports.
In contrast, Europe’s share increased significantly from 25% to 33% during the
same period, suggesting expanding demand for Indian digital, consulting and
enterprise support services across European economies. The rise also reflects greater
diversification by global firms, increasing digital adoption, and the growing role of
Global Capability Centres and cross-border professional services.
Fig 18: Major Destinations of Software Services Exports from India, 2014-15 and 2024-253%
3%
9%
25%
60%
2%
4%
6%
33%
54%
0% 10% 20% 30% 40% 50% 60% 70%
Australia & New Zealand
Other countries
Asia
Europe
USA & Canada
2024-25 2014-15
Source: RBI, Annual Survey

22Trade WatchB Jan-Mar (Q4) FY2025-26
Meanwhile, Asia’s share declined from 9% to 6%, while Australia and New Zealand
together accounted for a relatively small and declining share of exports. The changing
regional composition suggests that India’s IT and ITES exports remain closely linked
to demand from advanced economies, although the export markets have become
somewhat more geographically diversified over time (Fig 18).
Fig 19: Major Modes of Software Services Exports from India, 2014-15 and 2024-2517.1%
8.7%
14.4%
6.4%
0.0%
0.1%
68.5%
84.8%
0%
20%
40%
60%
80%
100%
2014-15 2024-25
Cross-border supply (Mode 1)
Consumption abroad (Mode 2)
Foreign subsidiaries (Commercial presence) (Mode 3)
On-site (Mode 4)
Source: RBI, Annual Survey.
Services are traded through four principal  modes
21
, outlined under the General
Agreement on Trade in Services (GATS) by the World Trade Organisation (WTO).
While globally, Mode 3 is the dominant mode of service exports in the world, Mode 1
dominates for India.
22
The composition of India’s software services exports has shifted
markedly towards cross-border digital delivery over the past decade. There is a decline
across Mode 2 and Mode 4, which has been compensated by an increase in Mode 1.
The share of exports delivered through cross-border supply (Mode 1) increased the
most, by 16.3%, in 2024–25, reflecting firms’ growing ability to provide services remotely
via digital networks. Taken together, these trends point to a gradual broadening
of India’s services export base, with cross-border digital delivery emerging as the
dominant mode of supply (Fig 19).
21 Mode 1 refers to services provided from the territory of one member into the territory of any other member, Mode
2 refers to services provided in the territory of one member to the service consumer of any other member, Mode 3
refers to services provided by a service supplier of one Member, through commercial presence, in the territory of any
other Member and Mode 4 refers to services provided by a service supplier of one Member, through the presence of
natural persons of a Member in the territory of any other Member
22 https://www.epw.in/journal/2026/22/commentary/indias-services-exports.html

23Trade Watch Jan-Mar (Q4) FY’2025-26
B.
THEMATIC ANALYSIS:
PHARMACEUTICAL
TRADE

24Trade WatchB Jan-Mar (Q4) FY2025-26
B. Thematic Analysis: Pharmaceutical Trade
1. Overview
As India advances towards its aspiration of becoming a $30 tn economy by 2047, the
pharmaceutical sector is expected to emerge as a key pillar of economic growth,
technological advancement, and global health leadership. Over the years, India has
established itself as a reliable and cost-competitive supplier of quality-assured medicines,
supported by a strong manufacturing ecosystem, skilled human capital, and growing
research capabilities. Reflecting this momentum, India’s pharmaceutical exports
excluding API reached ~$25.8 bn in 2025, while the domestic pharmaceutical market,
currently estimated at around $60 bn, is projected to expand to nearly $130 bn by 2030
23
.
The Indian pharmaceutical industry is currently the third largest by volume with more
than 3,000 companies and 10,500 manufacturing units
24
. Pharmaceuticals, Medicinal
Chemical and Botanical Products made up 7.2% of the total manufacturing GVA in 2023-
24, making it the fifth largest contributor
25
. The pharmaceutical sector also contributes
1.7% to India’s GDP
26
. The industry is also known as the ‘Pharmacy of the World’ due
to its role in supplying vaccines, essential medicines, and medical supplies during the
pandemic
27
. For India, pharmaceutical products (HS 30) are the fifth largest exported item
in 2025. It also supports 2.7 million livelihoods, either directly or indirectly
28
. That success is
underpinned by India’s ability to produce high-quality, low-cost medicines.
Globally spending on medicines is estimated to increase in the upcoming years at
a CAGR of 5-6% until 2028, with improved access to medicines, improved patient
access to innovative therapies in key markets and the surging demand for novel
speciality drugs
29
. Among the globally demanded products, pharmaceutical products
(HS 30) are the sixth largest demanded product, accounting for 6% of India’s total
merchandise exports by value in 2025. Indian pharmaceutical products are exported
to over 200 countries, with a significant share reaching highly regulated markets such
as the United States and Europe, which together account for more than half of India’s
pharmaceutical exports. This global footprint underscores India’s growing integration
into international healthcare supply chains and its strategic importance in ensuring
affordable access to medicines worldwide.
India is the largest supplier of generic drugs, accounting for about 20% of the global
supply. It has the highest number of United States Food and Drug Administration
(USFDA) compliant pharmaceutical plants outside of the United States of America
(USA)
30
. It also contributes significantly to ensuring affordable medicines globally by
supplying over 50% of Africa’s requirement for generics, nearly 40% of generic demand
in the US, and approximately 25% of all medicines in the UK. India is the world’s largest
supplier of antiretroviral drugs, providing over 70% of the global supply and ensuring
affordable access to the global south
31
.
23 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2205547&reg=3&lang=2
24 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2243248&reg=3&lang=2
25 Annual Survey of Industries (ASI) for FY 2023–24
26 https://www.ibef.org/industry/pharmaceutical-india
27 https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=152038&reg=3&lang=2
28 https://www.bain.com/insights/healing-the-world-a-roadmap-for-making-india-a-global-pharma-exports-hub/
29 https://www.iqvia.com/-/media/iqvia/pdfs/china/viewpoints/iqvia-institute-general-use-of-medicines-2024-for-print.pdf
30 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2243248&reg=3&lang=2
31 https://pharma-dept.gov.in/sites/default/files/Annual%20Report%202025-26.pdf

25Trade WatchB Jan-Mar (Q4) FY2025-26
2. Mapping the Global Trade Profile in Pharmaceutical Products
Pharmaceutical products under HS 30 can be further classified under three categories
comprising formulations, bulk drugs, and others
32
. The global demand for this
segment reached $1.02 trillion in 2025. India’s exports in this segment stood at $25.8
bn, accounting for 2.5% of global demand. The sector continued to generate a trade
surplus, with net exports amounting to $22.4 bn in 2025. Over the past decade, global
pharmaceutical demand expanded at a CAGR of 7.3%, while India’s pharmaceutical
exports grew marginally higher at 7.5%.
Table 2: Comparison of India’s Trade Profile for Pharmaceuticals, 2025
Code
Product
Category
Product label
World
Import
($bn)
Product
Share in
World
Demand
India’s
Export
($bn)
India’s
export
share in
World
demand
India’s
Im-
port
($bn)
India’s
RCA
Top
Exporter
and Value
($bn)
Top
Expo-
rter’s
RCA
‘3004
Form-
ulations
Retail
medicaments
/ formulated
drugs
571.555.6% 22.64.0% 1.48 1.6
Ger-
many
(72.5)
0.02
‘3002
Form-
ulations
Blood
products,
vaccines
& immun-
ologicals
390.238.0% 2.2 0.6% 1.570.2
Switzer-
land
(69.6)
1.5
‘3006 Others
Other pharm-
aceutical
preparations
26.1 2.5% 0.3 1.2% 0.18 0.5
Ger-
many
(3.8)
0.03
‘3003
Bulk
Medicines
Bulk mixed
medicaments
24.7 2.4% 0.4 1.4% 0.110.6
Ireland
(7.7)
3.3
‘3005 Others
Medical
dressings &
bandages
11.7 1.1% 0.1 0.7% 0.05 0.3
China
(2.3)
14.3
‘3001Others
Organo-
therapeutic
substances &
extracts
3.1 0.3% 0.2 7.3% 0.07 2.9
USA
(0.6)
2.2
 
Total
(Segment)
1027.5 25.8 2.5% 3.5
Note: Product categorisation is based on the methodology outlined in the ISID Working Paper, India’s Trade in
Pharmaceutical Products: A Method for the Classification of Pharmaceutical Products and Recent Trends (2022).
Source: ITC Trade Map
Within formulations, retail medicaments and formulated drugs (HS 3004) which
include a wide range of medicaments containing steroids, vitamins, alkaloids and
their derivatives constituted the largest pharmaceutical segment in 2025, accounting
for 55.6% of global pharmaceutical imports valued at $571.5 bn. India exported $22.6 bn
32 The categorizations are based on the methodology outlined in the ISID working paper, India’s Trade in
Pharmaceutical Products: A Method for the Classification of Pharmaceutical Products and Recent Trends (2022).

26Trade WatchB Jan-Mar (Q4) FY2025-26
in this category, capturing a 4.0% share in global exports with a Revealed Comparative
Advantage (RCA)
33
of 1.6, indicating a strong comparative advantage. Over the past
decade, India’s exports in this segment expanded at a CAGR of 7.3%, exceeding the
global import demand growth of 5.0%. The performance reflects India’s well-established
generic pharmaceutical manufacturing base, scale economies, cost competitiveness,
and strong integration with regulated export markets. Germany remained the leading
exporter, with exports of $72.5 bn, due to its strengths in patented formulations, high-
value therapeutics, and brand-driven pharmaceutical products.
The second-largest formulations category, blood products, vaccines, and
immunologicals (HS 3002), which comprises vaccines, cell therapy products and
immunological products, emerged as the fastest-growing pharmaceutical segment
globally, with imports reaching $390.2 bn and recording a CAGR of 12.3%. Despite the
rapid expansion of global demand, India’s exports in this category remained limited at
$2.2 bn, corresponding to a global export share of 0.6% and an RCA of 1.5. Switzerland
dominated the segment with exports of $69.6 bn, reflecting the concentration of
biologics, advanced therapeutics, and patented immunological products within
multinational pharmaceutical firms located in advanced economies. The biologics
segment is characterised by high capital intensity, long development timelines,
stringent regulatory requirements, and significant research and development costs.
Even for vaccines, sustained public-sector support and long-term R&D investment
remain critical due to relatively low commercial returns and high production
risks. Consequently, the global vaccine and biologics ecosystem continues to be
concentrated in high-income economies that maintain strong public funding,
procurement systems, and innovation support frameworks
34
.
Bulk mixed medicaments (HS 3003) are chemical formulations supplied in bulk to
hospitals, distributors, or manufacturers for further processing and packaging. India’s
competitiveness remains modest. Ireland emerged as the dominant exporter with a
global export share of approximately one-third along with an RCA of 3.37. This is the
result of favourable policies, including financial incentives, tax concessions, a highly
educated workforce, and its geographic location providing access to European and
North American markets.
35
The decline in India’s share also reflects the shift away from
bulk medicaments towards ready-to-use formulations and advanced dosage forms.
Medical dressings and bandages (HS 3005) remained a low-growth, highly competitive
segment, with global imports totalling $11.7 bn. India maintained only a 0.7% share with
RCA of 14.3, while China dominated the category through scale-based manufacturing
advantages and integrated medical supplies production networks.
A notable exception was organo-therapeutic substances and extracts (HS 3001),
where India’s exports increased strongly to $0.2 bn and export share rose to 7.3%,
with RCA of 2.9. Although the segment is small globally at $3.1 bn, India’s export
CAGR of 18.1% significantly exceeded the contraction in global demand. India is the
third-largest pharmaceutical producer globally by volume, after the United States
and China, supported by cost advantages and the availability of skilled human
33 A country is said to have a revealed comparative advantage (RCA) in a given product i when its ratio of exports of
product i to its total exports of all products exceeds the same ratio for the world as a whole. If RCA takes a value
greater than unity, the country has a revealed comparative advantage in that product
34 https://isid.org.in/wp-content/uploads/2023/01/WP258.pdf
35 https://kpmg.com/ie/en/insights/life-sciences/ireland-natural-home-global-pharma.html

27Trade Watch Jan-Mar (Q4) FY’2025-26
resources. However, around 65% of domestic pharmaceutical production is absorbed
by the domestic market, with only about 35% directed toward exports
36
. Overall, this
indicates that India’s pharmaceutical strength remains in generic formulations and
cost-efficient manufacturing, with innovation-intensive segments such as biologics,
immunologicals, and specialised therapeutics continuing to be dominated by
countries with stronger R&D ecosystems and intellectual property ownership (Table 2).
3. Mapping the Global Trade Profile in Active Pharmaceutical Ingredients (API), 2025
Active Pharmaceutical Ingredients (APIs) are the core chemical substances that confer
a medicine’s therapeutic effect, making them the most critical input in pharmaceutical
manufacturing. A country’s ability to secure a reliable API supply chain directly
determines the affordability, availability, and self-sufficiency of its pharmaceutical
sector. In 2025, the global API market stood at $261.2 bn in imports, with the top ten
products collectively amounting to $258.4 bn. India’s API exports were at $10.0 bn,
which translates to a share of 3.8% in the global demand. India is also a net exporter in
this segment, with imports at $7.4 bn.
Table 3: Comparison of India’s Trade Profile for Active Pharmaceutical Ingredients, 2025
CodeProduct label
World
Import
($bn)
Product
Share in
World
Demand
India’s
Export
($bn)
India’s
export
share in
World
demand
India’s
Import
($bn)
India’s
RCA
Top
Exporter
and
Value
($bn)
Top
Expo-
rter’s
RCA

‘2937
Hormones &
Analogues
97.8 37.5% 0.3 0.3% 0.400.04
Ireland
(61.0)
1.93
‘2933
Nitrogen
Heterocyclic
Compounds
96.5 36.9% 4.3 4.4% 2.350.49
Switzer-
land
(35.6)
1.89
‘2922
Amino
Compounds
15.7 6.0% 0.7 4.5% 0.840.50
China
(5.7)
1.12
‘2941Antibiotics 11.4 4.3% 0.9 8.2% 1.920.92
China
(4.3)
1.16
‘2918
Oxygenated
Carboxylic Acids
10.3 4.0% 0.7 6.7% 0.540.75
China
(3.3)
0.98
‘2936
Vitamins &
Provitamins
10.0 3.8% 0.3 3.2% 0.240.35
China
(3.7)
1.14
‘2924
Carboxyamides
& Amides
9.4 3.6% 0.8 9.0% 0.321.00
China
(2.9)
0.95
‘2923
Ammonium &
Phospholipid
Compounds
2.9 1.1% 0.2 6.4% 0.090.72
China
(0.6)
0.69
‘2939Alkaloids 2.8 1.1% 0.4 13.2% 0.141.48
China
(0.4)
0.44
‘2940
Specialty Sugars
& Derivatives
1.7 0.6% 0.0 1.9% 0.060.22
Germany
(0.3)
0.62
Total (Top 10) 258.4 8.7 3.35% 6.9 0.4
Total (Segment)261.2 10.03.83% 7.4
Note: Product categorisation as API is based on the methodology outlined in the ISID Working Paper, India’s Trade in
Pharmaceutical Products: A Method for the Classification of Pharmaceutical Products and Recent Trends (2022).Source: ITC
Trade Map
Hormones and Analogues (HS 2937) comprise 37.5% of global demand with a global
import of $97.8 bn in 2025, with India’s global share at 0.3% and RCA at 0.04. Ireland is
the leading exporter with an approximately two-third market share.
36 https://www.icra.in/Media/GetNewsFile/24508

28Trade WatchB Jan-Mar (Q4) FY2025-26
Nitrogen heterocyclic compounds (HS 2933) are the second largest product accounting
for the largest product in terms of volume of India’s API exports in 2025, at $4.3
bn, with India’s global export share at 4.4%. HS 2922 (amino compounds) recorded
exports of $0.7 bn and a global share of 4.5% in 2025. This segment is used in drug
synthesis. HS 2941 (antibiotics) recorded exports of $0.9 bn in 2025. HS 2936 (vitamins
and provitamins) recorded exports of $ 0.3 bn, with India’s share at 3.2%. Production
is concentrated in China and Germany due to economies of scale in fermentation
and chemical synthesis. HS 2939 (alkaloids) shows exports of $0.4 bn and RCA of 1.48,
indicating specialisation in a narrow set of products within this category. HS 2940
remains marginal in global trade, with limited participation by Indian exporters (Table 3).
Globally, there is an acute concentration of the input supply chains with China stated
to account for approximately 40% of global API demand
37
. For specific antibiotics,
including cephalosporins, azithromycin, and penicillin, China’s dominance is even
greater, accounting for 90-95% of worldwide production
38
.
4. Change in share in Pharmaceutical Exports over the years (2015-25)
The global pharmaceutical and organic chemicals market expanded significantly
between 2015 and 2025, particularly in high-value pharmaceutical formulations,
vaccines, and specialised chemical intermediates.
In pharmaceuticals (HS 30), global demand became increasingly concentrated in
vaccines, immunological, and retail formulations. World imports of blood products,
vaccines, and immunologicals increased from $122 bn in 2015 to $390 bn in 2025,
because of a clear combination of pandemic-related demand
39
, rapid expansion of
biologic medicines, and the growing globalisation of vaccine supply chains, thus
increasing their share in the global pharmaceutical import basket from 24.1% to 38.0%.
At the same time, the share of retail medicaments and formulated drugs declined
from 68.8% to 55.6%, although they remained the largest pharmaceutical category
globally. Imports also increased in bulk medicaments, medical dressings, and other
pharmaceutical preparations, though these categories continued to account for a
relatively small share of global demand.
India’s export performance in pharmaceuticals remained strongest in formulated
drugs and selected niche therapeutic segments. India’s global export share in retail
medicaments increased from 3.2% to 4.0%, reinforcing its position as a major supplier
of generic formulations. Significant gains were also observed in organo-therapeutic
substances and extracts, where India’s export share rose from 1.2% to 7.3%. While
India accounts for roughly 60% of the world’s vaccine manufacturing volume, its
share in global dollar-value exports of “vaccines and immunological” remains low at
about 0.6%, despite this segment emerging as the fastest-growing component of
global pharmaceutical trade. This disconnect stems from producing primarily low-
cost, conventional vaccines (like DPT and BCG)
40
rather than higher-value patented
therapies
41
. India also recorded declines in bulk mixed medicaments and other
pharmaceutical preparations, while medical dressings remained unchanged (Fig 20).
37 https://www.pharmanow.live/knowledge-hub/market-trends/india-china-pharma-supply-chain-dominance
38 https://www.icra.in/Media/GetNewsFile/24508
39 https://www.wto.org/english/blogs_e/data_blog_e/blog_dta_23may23_e.html
40 India is the global leader in the supply of Diphtheria, Tetanus, and Pertussis (DPT), Bacillus Calmette-Guerin (BCG),
and measles vaccines
41 https://isid.org.in/wp-content/uploads/2023/01/WP258.pdf

29Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 20: India’s Changing Share in Global Demand for Pharmaceutical Exports (2025-15)
-20%
-10%
0%
10%
20%
0%
2%
4%
6%
8%
Blood
products,
vaccines &
immunologica
ls
Medical
dressings &
bandages
Organo-
therapeutic
substances &
extracts
Other
pharmaceutic
al
preparations
Bulk mixed
medicaments
Retail
medicaments
/ formulated
drugs
India's share in world imports '15
India's share in world imports '25
Change in India's export share (2025-2015) (RHS)
Change in World's import share (2025-2015) (RHS)
Source: ITC Trade Map
5. Change in share in Active Pharmaceutical Ingredients Exports over the years
(2015-25)
The composition of global imports within APIs changed substantially over the decade.
Nitrogen heterocyclic compounds dominated global imports in 2015, accounting
for 46.9% of world demand, but their share declined to 37.3% by 2025. In contrast,
hormones and analogues recorded a sharp rise in global importance, with their share
in world imports increasing from 11.5% to 37.9%, making them the largest traded
category by 2025. The sharp increase in the share of hormones and analogues in global
pharmaceutical imports was driven by the rapid expansion of high-value peptide-
based and hormone-related therapies, particularly GLP-1 receptor agonists such as
semaglutide and tirzepatide, used in the treatment of diabetes and obesity. Demand
for GLP-1 medicines surged globally during 2021–25, while rising diabetes prevalence
and obesity rates further boosted demand for hormone-based therapeutics
42
. Other
product groups, such as amino compounds, antibiotics, oxygenated carboxylic acids,
and vitamins, witnessed either stagnant or declining shares in the global import
basket despite moderate growth in absolute trade values.
Fig 21: India’s Changing Share in Global Demand for Active Pharmaceutical Ingredients Exports (2025-15)-20%
-10%
0%
10%
20%
30%
0%
4%
8%
12%
16%
Ammonium &
Phospholipid
Compounds
Nitrogen
Heterocyclic
Compounds
Hormones &
Analogues
Vitamins &
Provitamins
Carboxyamides &
Amides
Alkaloids
Amino
Compounds
Specialty Sugars &
Derivatives
Oxygenated
Carboxylic Acids
Antibiotics
India's share in world exports '15 India's share in world exports '25
Change in India's export share (2025-2015) (RHS) Change in World's import share (2025-2015) (RHS)
Source: ITC Trade Map
India’s export performance across these products was mixed but showed clear gains
in several specialised chemical segments. India’s global export share in nitrogen
heterocyclic compounds increased sharply from 1.7% to 4.4%, while significant gains
42 https://annualreport.novonordisk.com/2024/strategic-aspirations/commercial-execution.html

30Trade Watch Jan-Mar (Q4) FY2025-26
were also recorded in carboxyamides and amides (2.3% to 9.0%), alkaloids (2.9% to
13.2%), ammonium and phospholipid compounds (1.6% to 6.4%), oxygenated carboxylic
acids (5.1% to 6.7%), and vitamins and provitamins (1.9% to 3.2%). India also retained a
strong position in antibiotics, with export share remaining broadly stable at above
8%. However, India’s position weakened considerably in hormones and analogues,
where its export share declined from 1.8% to 0.3%, despite the category emerging as
the single largest segment in global trade. India’s exports are relatively low because
the domestic pharmaceutical industry has historically prioritised volume-driven
generic formulations over complex, high-barrier biotech products. The sector remains
heavily constrained by raw material dependencies
43
, strict international regulatory
requirements, and high specialised manufacturing costs. A decline was also observed
in speciality sugars and derivatives. India strengthened its competitiveness in several
specialised and intermediate chemical products, and needs to expand its presence in
the rapidly expanding high-value hormones segment (Fig 21).
India’s Active Pharmaceutical Ingredients (API) Import Dependence
India’s API imports in 2025 were valued at $7.4 bn, with the top five product categories
alone contributing $6.2 bn, or nearly 84% of total demand in the segment. Across
these products, the top import sources to India also account for nearly 80% of its
demand for each product. The top five supplying countries accounted for over four-
fifths of imports across the leading API categories, with China serving as the principal
source and a small group of countries, including Italy, Germany, the United States,
Austria, and Singapore, occupying secondary positions. This concentration highlights
the critical role the leading API suppliers play in India’s pharmaceutical supply chain.
Table 4: India’s Import Dependence on Top 5 API Products on Leading Import Sources, 2025
S.No
HS
Code
Product label
Imported
value in
2025 ($bn)
Share
of the
product
in India’s
total API
Imports
Top
Importing
Sources
Share
Combined
share of top
5 countries
 
‘TOTAL
Total API
Imports
7.4 84%      
1 2933
Nitrogen
Heterocyclic
Compounds
2.3 31.9%
China 76.4%
85.9%
Italy 3.3%
Singapore 2.7%
USA 2.1%
Japan 1.4%
2 2941 Antibiotics 1.9 26.1%
China 86.1%
93.0%
Austria 2.1%
Italy 1.8%
Germany 1.6%
Spain 1.4%
43 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3906479

31Trade Watch Jan-Mar (Q4) FY’2025-26
S.No
HS
Code
Product label
Imported
value in
2025 ($bn)
Share
of the
product
in India’s
total API
Imports
Top
Importing
Sources
Share
Combined
share of top
5 countries
3 2922
Amino
Compounds
0.8 11.5%
China 73.1%
85.6%
Germany 3.9%
Italy 3.2%
Malaysia 3.2%
USA 2.2%
4 2918
Oxygenated
Carboxylic
Acids
0.5 7.4%
China 65.9%
86.9%
Italy 8.3%
Brazil 6.0%
Germany 4.0%
France 2.7%
5 2932
Heterocyclic
compounds
with oxygen
0.5 7.3%
China 72.6%
86.8%
USA 7.9%
Switzerland 2.5%
Saudi
Arabia
2.0%
Poland 1.8%
Source: ITC Trade Map
At the product level, nitrogen heterocyclic compounds emerged as the largest import
category with imports of $2.3 bn, accounting for 31.9% of total API imports, followed by
antibiotics at $1.9 bn (26.1%). Amino compounds contributed 11.5%, while oxygenated
carboxylic acids and heterocyclic compounds with oxygen accounted for around 7% each.
Together, the top two categories constituted nearly 58% of India’s API import basket,
indicating concentration in a narrow range of pharmaceutical inputs.
China accounted for over three-fourths of imports in nitrogen heterocyclic compounds
(76.4%) and antibiotics (86.1%), while its share remained above 65% in the other leading
product groups. This dominance reflects China’s established scale advantages,
integrated chemical manufacturing ecosystem, and cost competitiveness in bulk
pharmaceutical ingredients.
Although China’s share in India’s API imports has moderated marginally since 2010,
dependence remains significant, with several APIs sourced predominantly from
China. The cost competitiveness of Chinese API manufacturers has contributed to this
reliance. Large-scale production facilities, favourable climatic conditions that lower
energy requirements during certain stages of production, and government support
through subsidised utilities and industrial infrastructure have enabled Chinese
firms to achieve lower production costs. As a result, APIs imported from China are
estimated to be 35–40% cheaper than domestically produced alternatives, affecting
the commercial viability of API manufacturing in India and contributing to the closure
of some domestic production facilities
44
.
The high degree of product and supplier concentration underscores continued
external dependence in critical pharmaceutical inputs and highlights the importance
of ongoing efforts to strengthen domestic API manufacturing capacity and diversify
sourcing channels.
44 https://isid.org.in/pdf/WP239.pdf

32Trade Watch Jan-Mar (Q4) FY’2025-26
6. Mapping Global Demand and India’s Export Footprint in Key Pharmaceutical
Exports
The composition of India’s pharmaceutical exports highlights a strong concentration
in formulations, particularly retail medicaments and formulated drugs (HS 3004),
in which India has gained significant market share in large regulated markets. The
United States alone accounted for 41% of India’s exports in this category. Indian
medicines are stated to reach over 200 markets worldwide, with the majority of its
exports going to stringent regulatory destinations
45
. Globally, exports in HS 3004
remain dominated by European economies such as Germany, Italy, and Switzerland,
reflecting their leadership in patented drugs, speciality therapeutics, and high-value
branded pharmaceuticals.
In contrast, India’s export profile in blood products, vaccines, and immunologicals (HS
3002) reveals that India’s competitiveness in vaccines and biologicals is concentrated
in low-cost and developing-country markets. The top importers globally are the United
States, Germany, and Belgium, while India’s principal export markets are developing
economies such as Nigeria and Bangladesh. India also supplies close to 50% of Africa’s
requirement and 40% of the US requirements of generics and approximately 25% of
all kinds of medicines to the UK
46
.
Table 5: Mapping Global Demand and India’s Export Footprint in Key Pharmaceutical Exports
HS
Code
Product
World
Imports
($bn)
India’s Top
Export
Destinations (%
share)
Major Global
Exporters
(Share in World
Exports %)
Top Importers
(%)
‘3004
Retail
medicaments
/ formulated
drugs
571.5
USA (41%), UK
(3.3%), South
Africa (2.8%)
Germany (13.5%),
Italy (10.2%),
Switzerland
(9.3%)
USA (16.5%),
Switzerland
(9.7%),
Germany (7.4%)
‘3002
Blood products,
vaccines &
immunologicals
390.2
Nigeria (7.3%),
Bangladesh
(4.7%), Pakistan
(4.5%)
Switzerland
(18.2%), USA
(15%), Ireland
(13.7%)
USA (28.1%),
Germany
(8.9%), Belgium
(8.9%)
‘3006
Other
pharmaceutical
preparations
26.1
USA (21.6%),
Spain (7.3%),
Russia (6%)
Germany (17.2%),
USA (12.2%),
Netherlands
(11.9%)
USA (20%),
Netherlands
(12.6%),
Germany (7.5%)
‘3003
Bulk mixed
medicaments
24.7
USA (18.5%),
Germany (13.8%),
Belgium (8.7%)
Ireland (33.6%),
Portugal (16.6%).
Belgium (5.4%)
Belgium
(34.6%), Saudi
Arabia (12.1%),
USA (10%)
‘3005
Medical
dressings &
bandages
11.7
USA (25.4%),
Germany (11.2%),
Nepal (6.2%)
China (19.4%),
USA (11.4%),
Germany (8.9%)
USA (16.8%),
Germany
(10.8%),
Netherlands
(6.6%)
‘3001
Organo-
therapeutic
substances &
extracts
3.1
USA (91.7%),
Philippines (1.2%),
Saudi Arabia
(0.6%)
USA (20.2%),
China (18.5%),
Singapore
(10.3%)
USA (15.2%),
France (11.7%),
Singapore
(7.6%)
Source: ITC Trade Map
45 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2205547&reg=3&lang=2
46 https://blogs.pib.gov.in/blogsdescr.aspx?feaaid=68

33Trade Watch Jan-Mar (Q4) FY’2025-26
A similar pattern is visible across other pharmaceutical categories. In other
pharmaceutical preparations (HS 3006) and medical dressings and bandages (HS
3005), India has achieved stronger penetration in the United States market, indicating
competitiveness in relatively standardised and cost-sensitive product segments.
Global exports in this category are heavily concentrated in Ireland and Portugal,
reflecting the role of tax-efficient pharmaceutical manufacturing hubs and contract
manufacturing networks integrated with multinational firms.
The export concentration of organo-therapeutic substances and extracts (HS 3001)
is particularly striking, with over 90% of India’s exports directed toward the United
States. This indicates strong market linkages and access to one of the world’s leading
consumer markets. India also has a strong pharma network with over 650 US-FDA
compliant labs
47
, the largest outside the USA, making it one of the leading exporters
to the US for pharmaceutical products (Table 5).
7. Mapping Global Demand and India’s Export Footprint in Key Active
Pharmaceutical Ingredients (API) Exports
India’s export footprint in API-based products reveals a presence across American,
European, and Asian markets. India has achieved greater market penetration in the
United States across several API categories, particularly amino compounds (HS 2922)
and oxygenated carboxylic acids (HS 2918). The US is also the leading importer across
the majority of the key API products.
In hormones and analogues (HS 2937), global trade remains highly concentrated, with
Ireland alone accounting for over two-thirds of world exports. Although the United
States is the largest global importer with nearly 60% of global imports, India’s exports
to the United States account for 13.9% of India’s shipments of these products. A similar
pattern is evident in nitrogen heterocyclic compounds (HS 2933), wherein India
exports to advanced pharmaceutical markets such as the United States, Switzerland,
and the Netherlands, global exports are overwhelmingly dominated by Switzerland
and Ireland. These segments continue to be dominated by selective economies.
Table 6: Mapping Global Demand and India’s Export Footprint in Key Active
Pharmaceutical Ingredients Exports
HS
Code
Product
World
Imports
($bn)
India’s Top
Export
Destinations (%
share)
Major Global
Exporters
(Share in World
Exports %)
Top Importers
(%)
‘2937
Hormones &
Analogues
97.8
USA (13.9%),
Egypt (8%),
Netherlands
(6.4%)
Ireland (66.4%),
USA (20.8%),
Denmark (4.3%)
USA (59.9%),
Italy (25.3%),
China (25.3%)
‘2933
Nitrogen
Heterocyclic
Compounds
96.5
USA (8.3%),
Switzerland
(7.3%),
Netherlands
(4.8%)
Switzerland
(38.4%), Ireland
(14.2%), China
(12%)
Slovenia
(19.5%),
Germany
(13%), Italy
(9.9%)
47 https://www.bain.com/insights/healing-the-world-a-roadmap-for-making-india-a-global-pharma-exports-hub/

34Trade Watch Jan-Mar (Q4) FY2025-26
HS
Code
Product
World
Imports
($bn)
India’s Top
Export
Destinations (%
share)
Major Global
Exporters
(Share in World
Exports %)
Top Importers
(%)
‘2922
Amino
Compounds
15.7
USA (19.8%),
China (10.3%),
Netherlands
(8.7%)
China (40.4%),
USA (7%),
Germany (6.8%)
USA (9.6%),
Germany
(6.9%), India
(5.4%)
‘2941 Antibiotics 11.4
Bangladesh
(8.8%), Viet Nam
(5.9%), China
(5.6%)
China (43.3%),
India (9.3%),
Switzerland
(8.7%)
India (16.9%),
Italy (10.9%),
USA (6.9%)
‘2918
Oxygenated
Carboxylic Acids
10.3
USA (22.1%),
Singapore
(12.9%), Italy
(11.8%)
China (37.4%),
India (7.8%),
Germany (7.7%)
USA (14.9%),
Germany
(7.8%), India
(5.3%)
Source: ITC Trade Map
In the remaining three product categories, i.e., amino compounds (HS 2922), antibiotics
(HS 2941), and oxygenated carboxylic acids (HS 2918), China remains the major global
exporter, meeting almost two-fifths of global demand for these products. India
demonstrates a comparatively stronger position in antibiotics (HS 2941), accounting
for 9.3% of global exports and ranking among the leading suppliers globally after China.
India has emerged as the second largest supplier for these products, particularly to
regulated markets such as the United States and Europe. The presence of India itself
among the leading exporters and importers in two of the major API categories also
reflects its inclusion in pharmaceutical value chains as an intermediary (Table 6).
Global Pharmaceuticals Success Stories (Germany, Switzerland, China)
Leading pharmaceutical exporters such as Germany, Switzerland, and China have
built globally competitive pharmaceutical industries through sustained investments
in research and development, strong manufacturing capabilities, supportive policy
frameworks, and the growth of globally competitive firms. Germany’s success is rooted
in an integrated industrial ecosystem linking its chemical and pharmaceutical sectors,
while Switzerland has leveraged a strong innovation ecosystem, robust intellectual
property protections, and world-class research institutions, with pharmaceutical sector
exports over 98% of its production
48
and contributes nearly 22% of total merchandise
exports
49
. Pharmaceutical growth in these countries has also been driven by the
emergence of large domestic firms, such as Bayer, Merck, and Boehringer Ingelheim
in Germany, and Roche and Novartis in Switzerland, which have invested heavily in
innovation and global expansion. These experiences highlight the importance of
innovation, domestic capabilities, and competitive firms in sustaining pharmaceutical
export success.
● Building on Existing Chemical and Manufacturing Capabilities: Germany,
Switzerland and China all built their pharmaceutical industries on strong
chemical manufacturing foundations. Germany and Switzerland transitioned
48 https://www.accurity.ch/2021/06/27/pharmaceutical-sector-growth-in-switzerland-pandemic-score-card/
49 https://www.swissinfo.ch/eng/healthcare-innovation/six-charts-show-challenges-facing-swiss-pharmaceutical-
industry/91593819

35Trade Watch Jan-Mar (Q4) FY2025-26
from advanced chemical and dye industries into pharmaceutical innovation,
while China leveraged large-scale API, KSM and chemical manufacturing
capabilities to develop industrial expertise, integrate into global supply chains
and support its move into higher-value pharmaceutical production.
● Investing Heavily in Research and Development: Germany, Switzerland,
and China all supported pharmaceutical competitiveness through sustained
R&D spending. Germany’s firms invested heavily in research and clinical trials,
Switzerland became one of the world’s most R&D-intensive economies, and
China significantly expanded investment in biotechnology, biologics, and
innovative drug development. China’s national R&D expenditure rose to over
2.8% of GDP, while pharmaceutical and biotechnology firms sharply increased
spending on drug discovery, cell and gene therapies, precision medicine, and
biologics, supporting the country’s transition from generic and API production
to innovative drug development.
● Developing Pharmaceutical and Biotechnology Clusters: Germany,
Switzerland, and China concentrated pharmaceutical activities in innovation
hubs that facilitated collaboration and commercialisation. Germany’s
BioRegio programme promoted regional biotechnology clusters centred
around universities and research institutes. Switzerland developed a globally
competitive life sciences ecosystem around Basel. China established major
pharmaceutical and biotechnology clusters in cities such as Shanghai, Beijing,
Suzhou, and Shenzhen, bringing together firms, research institutions, hospitals,
investors, and service providers.
● Using Industrial Policy to Accelerate Pharmaceutical Upgrading: China’s
pharmaceutical development was strongly supported by long-term industrial
policy. Initiatives such as the National Medium- and Long-Term Science and
Technology Development Plan, the Twelfth and Thirteenth Five-Year Plans,
and subsequent industrial modernisation strategies identified biotechnology
and innovative medicines as strategic sectors. These policies were backed by
public R&D funding, tax incentives, innovation infrastructure, and targeted
support for pharmaceutical and biotechnology enterprises, enabling China
to transition from a producer of APIs and generic medicines to an emerging
centre for pharmaceutical innovation.
8. Non-tariff measures in Pharmaceutical Trade faced by India
India’s pharmaceutical exports are primarily directed towards developed markets such
as the United States, the United Kingdom, France, and Canada. Among developing
economies, South Africa, Nigeria, and Brazil remain important export destinations.
An assessment of non-tariff measures (NTMs) across key developed and developing
markets is essential to map the regulatory and market-access constraints that shape
India’s pharmaceutical export competitiveness and prospects for further expansion in
global markets.
Non-tariff measures (NTMs) have become increasingly restrictive than tariffs, raising
compliance costs and serving as key barriers to global trade through complex standards,
certifications, and regulatory requirements. According to UNCTAD, least developed
countries have lost nearly 10% of their export potential to G20 markets due to their

36Trade WatchB Jan-Mar (Q4) FY2025-26
inability to comply with these stringent requirements, with developing economies
bearing the highest adjustment costs
50
. These measures are critical because the
sector is directly linked to public health, patient safety, quality assurance, intellectual
property protection, and regulatory compliance. Consequently, the pharmaceutical
trade is subject to extensive regulatory oversight relating to manufacturing standards,
labelling, testing, certification, licensing, and product approvals.
Given the importance of developed markets in India’s pharmaceutical exports, the
analysis focuses on NTMs imposed by major developed economies, including the
United States, European Union, Canada, Japan and Switzerland. India faced a total
of 716 non-tariff measures across these markets under the category ‘Medicines for
Human Use’.
Fig 22: Non-tariff measures faced by India in select Developed Countries
Source: UNCTAD TRAINS
Note: These are the leading measures under the product group medicines for human use
Among these, Sanitary and Phytosanitary (SPS) measures
51
, Technical Barriers to
Trade (TBT)
52
and non-automatic licensing, quotas, prohibitions and quality control
measures together accounted for 678 measures, which equate to 95% of non-tariff
measures faced in these economies.
Technical Barriers to Trade (TBT) measures constitute the largest category of NTMs
across most developed markets, particularly in the United States, Canada and
Japan. Sanitary and Phytosanitary (SPS) measures are also important in several
jurisdictions, while non-automatic licensing, quotas, prohibitions, and quality control
measures remain relevant in specific countries. 305 NTMs have been recorded in the
US followed by 184 in Canada, 146 in Australia, 139 in Japan, 63 in European Union
and 25 in Switzerland. TBT measures account for nearly 79% of recorded NTMs
in the United States, 74% in Canada and 71% in Japan. SPS measures are relatively
more prominent in Switzerland and the European Union. Measures relating to non-
automatic licensing and quality controls are also observed across all major markets,
specifically in Switzerland, European Union, and Canada, though with a much lower
incidence relative to TBT measures. The concentration of measures in these categories
reflects the highly regulated nature of pharmaceutical trade, where market access is
increasingly determined by conformity assessment procedures, technical standards,
and regulatory approvals (Fig 22). 50 https://unctad.org/publication/global-trade-update-may-2026-invisible-barriers-costs-non-tariff-measures
51 SPS measures include food and feed processing requirements, geographical restrictions on eligibility, inspection and
storage, traceability requirements among others.
52 TBT measures consist of labelling, product quality and safety, testing, packaging and certification procedures among others.

37Trade Watch Jan-Mar (Q4) FY’2025-26
Several emerging and developing economies, such as China, South Korea, Brazil,
Saudi Arabia and Mexico, also represent important markets for the expansion of India’s
pharmaceutical exports. A total of 778 measures have been observed across these
markets with Technical Barriers to Trade (TBT), Export-related measures, and Sanitary
and Phytosanitary (SPS) measures constituting of 627 or 80% of the total measures
imposed. TBT constitute the most dominant category of regulatory measures across
all countries, accounting for almost half of all measures in South Korea and Brazil, and
nearly four-fifths in Mexico. Sanitary and Phytosanitary (SPS) measures also remain
significant, particularly in Brazil and China, reflecting stringent regulatory and quality
compliance requirements in pharmaceutical trade. Export-related measures
53
are
high, particularly in China (Fig 23).
Fig 23: Non-tariff measures faced by India in select Developing Countries0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
China
South Korea
Brazil
Saudi Arabia
Mexico
Sanitary and Phytosanitory (SPS) measures
Technical Barriers to Trade(TBT)
Pre-shipment inspections and other formalities
Non-automatic, licensing, quotas, prohibitions and quality control measures
Price-control measures including additional taxes and charges
Finance Measures
Measures affecting competition
Subsidies
Intellectual Property
Rules of Origin
Export-related Measures
Note: These are the leading measures under the product group medicines for human use
Source: UNCTAD TRAINS
India’s Presence in Pharmaceutical Import Demand of Leading
Developing Countries
The global pharmaceutical market (HS Chapter 30) is valued at approximately $1.02
trillion in import demand. Of this, developing countries account for $159.3 bn. The
table below presents the ten largest pharmaceutical importers in terms of their share
in developing economies, highlighting the key markets that drive pharmaceutical
demand.
India’s pharmaceutical exports to developing markets increased from $5.5 bn in
2015 to $9.7 bn in 2025, implying a CAGR of 5.8%, marginally outpacing the growth in
aggregate import demand of these markets (5.4%). Consequently, India’s market share
in developing-country pharmaceutical imports increased to 6.1% in 2025. To the leading
ten import markets of the developing countries, India exports $2.13 bn. However, India’s
export footprint is disproportionately anchored in smaller, price-sensitive markets
across Sub-Saharan Africa and South and Southeast Asia, while its presence remains
marginal in the ten largest developing-country pharmaceutical importers listed above,
markets that collectively account for over $159.3 bn in import demand for 2025. In China,
Taipei, and Argentina, alone, representing a combined import demand of approximately
$50 bn in 2025, India’s average market share stands below 1%, pointing to a structural
53 Export-related measures include licensing, export quotas, pricing among others

38Trade WatchB Jan-Mar (Q4) FY2025-26
gap between India’s global export scale and its penetration in high-value developing
markets. In contrast, Mexico represents India’s most dynamic growth story among
major developing-country markets, with Indian pharmaceutical exports registering a
CAGR of 24.2% over 2015–2025, far outpacing Mexico’s overall pharmaceutical import
demand growth of 7.7%. This expansion has been facilitated in part by Mexico’s health
regulator COFEPRIS (now CONASA) recognising approvals from stringent regulatory
authorities, including the USFDA and EMA
54
, thereby reducing duplicative review
requirements for Indian manufacturers holding such approvals. This regulatory
equivalence mechanism has materially lowered market entry costs and timelines for
Indian exporters and represents a replicable model for bilateral regulatory engagement
with other developing-country partners (Table 7).
Table 7: India’s Export Footprint in Leading Developing Pharmaceutical Markets
Country
Imported
value in
2015 ($bn)
Imported
value in
2025 ($bn)
Share of
Country
in World
Demand,
2025
India’s
exports
2015
($bn)
India’s
exports
2025
($bn)
India’s
share in
Country’s
Import
Demand,
2025
CAGR
(2015-25)
Import
Demand
CAGR
(2015-
25)
India’s
Exports
Developing
Markets
(Aggregate excl
India)
94.3 159.3 16% 5.5 9.7 6.1% 5.4% 5.8%
China 19.2 40.4 3.9% 0.02 0.08 0.2% 7.7% 12.6%
Brazil 6.5 14.5 1.4% 0.22 0.60 4.1% 8.4% 10.6%
Russia 8.4 14.1 1.4% 0.36 0.47 3.3% 5.4% 2.7%
Mexico 4.8 10.1 1.0% 0.03 0.29 2.8% 7.7% 24.2%
Türkiye 4.3 6.5 0.6% 0.05 0.12 1.9% 4.2% 9.0%
Taipei, Chinese 2.8 5.9 0.6% 0.01 0.03 0.5% 7.7% 14.5%
Colombia 2.3 4.3 0.4% 0.05 0.15 3.6% 6.3% 13.0%
Viet Nam 2.5 3.5 0.3% 0.14 0.17 4.8% 3.5% 1.6%
Thailand 2.0 3.4 0.3% 0.09 0.20 5.8% 5.2% 8.3%
Argentina 2.4 3.0 0.3% 0.01 0.02 0.8% 2.2% 10.9%
Note: Values denoted for HS 30
Source: ITC Trade Map
Entry barriers vary across countries and encompass complex regulatory frameworks,
lengthy product approval processes, language requirements, localisation norms,
procurement restrictions, and price-control mechanisms. In China, for instance,
the National Volume-Based Procurement (NVBP) programme seeks to reduce
healthcare expenditure through centralised bulk procurement
55
. Under this system,
pharmaceutical suppliers compete primarily on price
56
, with successful bidders
54 https://globalregulatorypartners.com/cofepris-introduces-abbreviated-regulatory-pathway-reliance-to-accelerate-
health-product-approvals-in-mexico/
55 https://www.sciencedirect.com/science/article/pii/S2950266725000254
56 NVBP legally binds 60%−80% market share to price reductions through contractual obligations

39Trade WatchB Jan-Mar (Q4) FY2025-26
securing a substantial share of the market through long-term procurement contracts.
China is the world’s largest producer of Active Pharmaceutical Ingredients (APIs),
serving as a primary upstream supplier of inputs to India’s formulations industry. In
this context, China’s vertically integrated domestic manufacturers retain decisive cost
and scale advantages that constrain the market space available to foreign generic
suppliers including India. In addition, Indian pharmaceutical firms have historically
encountered challenges related to regulatory approvals, including lengthy registration
procedures and limited transparency in certain approval processes
57
.
Brazil, India’s third-largest pharmaceutical export destination among developing
economies, presents a different set of challenges. While India has established a
relatively strong market position, accounting for 4.1% of Brazil’s pharmaceutical
imports, further expansion is constrained by the country’s stringent regulatory
environment. Brazil’s health regulator, ANVISA, maintains rigorous quality, safety
and compliance requirements, often resulting in lengthy approval timelines and
significant compliance costs.
India’s export performance is shaped as much by regulatory and institutional factors
as by underlying cost competitiveness. India’s strongest competitive differentiator, its
large base of USFDA and EMA-approved manufacturing facilities, is an underutilised
asset in developing-country markets, many of which extend regulatory recognition
to approvals from stringent authorities. Leveraging this quality credential through
bilateral regulatory cooperation agreements, mutual recognition frameworks, and
coordinated diplomatic engagement could materially accelerate India’s market share
gains in high-potential markets, while also addressing the structural barriers that have
historically constrained growth in larger markets such as China and Russia.
9. Assessing Foreign Investment
58
Trends in Drugs and Pharmaceutical Sector
FDI inflows into India’s drugs and pharmaceuticals sector have remained volatile over
the past decade. The sector witnessed strong inflows of $1.5 bn in FY’2015, accounting
for 3.3% of India’s total FDI inflows. However, inflows declined sharply over the following
years, falling to $857 mn in FY’2017 and further to $266 mn in FY’2019, when the sector’s
share in total FDI dropped to just 0.4% and bounced back to 891 mn or 1.1% of total
inflows in FY’2025.
Fig 24: Foreign Direct Investment Flows in Drugs and Pharmaceutical Sector3.3%
0.4%
2.9%
1.1%
0.0%
1.0%
2.0%
3.0%
4.0%
0
500
1000
1500
2000
2500
FY 2015FY 2017FY 2019FY 2021FY 2023FY 2024FY 2025
$ mn
FDI equity inflow in drugs and pharmaceuticals
Share of drugs and pharma in total FDI (RHS)
Source: DPIIT
57 https://www.orfonline.org/expert-speak/why-india-remains-unable-to-sell-at-scale-in-china
58 Foreign Direct Investment comprises of the sum of Equity Inflow, Reinvested Earnings and Other Capital, we have
analyzed only FDI Equity Inflow. FDI Equity Inflow forms the major component and have been plotted here.

40Trade WatchB Jan-Mar (Q4) FY2025-26
The sector recorded a strong recovery during FY’2021 and FY’2023, with FDI inflows
rising to $1.5 bn and $2.1 bn, respectively. The share of pharmaceuticals in total FDI also
increased to 1.8% in FY’2021 and further to 2.9% in FY’2023. The recovery was supported
by growing global demand for pharmaceuticals during and after the pandemic,
supply chain diversification away from excessive dependence on China, and policy
initiatives such as the Production Linked Incentive (PLI) scheme for pharmaceuticals
and bulk drugs. However, inflows moderated again from $1.1 bn in FY’2024 to $891 mn
in FY’2025, with the sector’s share in total FDI declining from 1.5% to 1.1%, respectively.
While India continues to remain a major global supplier of generic medicines and
vaccines, the fluctuating pattern and relatively limited share of FDI inflows indicate
that the sector’s investment potential remains underutilised, particularly in high-
value segments such as biologics, advanced APIs, and pharmaceutical R&D (Fig 24).
India’s pharmaceutical sector is one of the largest beneficiaries of the Production Linked
Incentive (PLI) programme, with three dedicated schemes targeting distinct objectives:
promoting high-value pharmaceutical manufacturing, reducing dependence on imports
of critical bulk drugs, and strengthening the domestic medical devices ecosystem. The
three pharmaceutical PLI schemes have a combined approved outlay of ₹25,360 crore.
In comparison, the large-scale electronics manufacturing sector has received the highest
allocation under the PLI programme, with an approved outlay of ₹40,951 crore
59
.
The PLI Scheme for Pharmaceuticals seeks to enhance India’s presence in advanced
products such as biopharmaceuticals, complex generics and orphan drugs, while
the Bulk Drugs PLI focuses on domestic production of critical APIs, KSMs and drug
intermediates. They have also supported the domestic manufacture of several products
for the first time and created capacity for critical bulk drugs, contributing to import
substitution and supply-chain resilience. Together, the schemes form a key pillar
of India’s pharmaceutical industrial strategy aimed at improving competitiveness,
reducing external dependence and moving up the global value chain.
10. India’s Participation in Value Chains for Pharmaceutical Exports
India’s strengthening position in the global pharmaceutical value chains reveals
a gradual rise in imported content in recent years. Domestic value addition in
pharmaceutical exports increased significantly from $7.4 bn in 2012 to $13.7 bn in 2022,
reflecting a strong expansion in India’s pharmaceutical manufacturing capabilities.
Domestic value-added content consistently remained the dominant component of
exports, accounting for 74–87% of total export value during the period. The share of
domestic value addition peaked at 87% in 2017, then moderated to 74% by 2022.
Foreign value-added content, although relatively smaller than domestic value-added
content, more than doubled from $2.0 bn in 2012 to $4.9 bn in 2022. Its share in exports
initially declined from 21% in 2012 to a low of 13% in 2017, indicating increased domestic
sourcing and greater self-sufficiency in pharmaceutical production. However, after
2017, the foreign value-added share began rising steadily, reaching 26% in 2022. This
suggests that while India strengthened its domestic pharmaceutical base, the sector
simultaneously became more integrated into global production networks, particularly
through imported intermediates, active pharmaceutical ingredients (APIs), speciality
chemicals, and advanced inputs.
59 https://sansad.in/getFile/loksabhaquestions/annex/187/AU601_tMrlXC.pdf?source=pqals

41Trade Watch Jan-Mar (Q4) FY2025-26
Fig 25: India’s GVC Integration in the Manufacturing of basic pharmaceutical products and preparations
9.1
13.7
1.6
4.9
0
4
8
12
16
2015 2016 2017 2018 2019 2020 2021 2022
$ bn
Domestic Value Added Foreign Value Added
Source: OECD TiVa
The data indicate two distinct phases in India’s pharmaceutical value chain
evolution. Between 2012 and 2017, the sector achieved increasing domestic value
addition alongside declining import dependence, reflecting expansion in domestic
manufacturing capabilities and greater localisation of production processes. During
this phase, India’s pharmaceutical industry consolidated its position as a leading global
supplier of generic medicines and formulations, supported by cost competitiveness,
strong manufacturing infrastructure, and regulatory approvals in major export
markets. India’s dominance in formulations exports is evident in the fact that
formulations account for nearly 79% of India’s pharmaceutical exports, highlighting
the sector’s comparative strength in higher-value-added finished products rather
than bulk raw materials (Fig 25).
In contrast, the post-2017 period reflects a rise in foreign value-added intensity despite
continued growth in domestic value addition. This trend points towards deeper
participation in complex global value chains, where higher-value pharmaceutical
products increasingly rely on imported specialised intermediates, biotechnology
inputs, and advanced chemicals. The simultaneous rise in both domestic and foreign
value-added components suggests that India’s pharmaceutical exports have become
more sophisticated and integrated with international supply chains rather than
simply import-dependent. At the same time, import dependence on pharmaceutical
intermediates remains significant, particularly for APIs and key starting materials
(KSMs), with China accounting for 70–75% of India’s imports in several product
categories
60
.

The dominance of domestic value addition throughout the period
nevertheless demonstrates that pharmaceutical exports continue to generate
substantial value within India through formulation manufacturing, processing,
packaging, research and development, and regulatory compliance activities.
Formulations remain the key strength of India’s pharmaceutical sector, contributing
to significantly higher domestic value addition than bulk drug or API exports. This
aligns with India’s strong competitiveness in generic medicines and finished dosage
formulations, which involve greater technological capabilities and higher value
60 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2237414&lang=1&reg=3

42Trade Watch Jan-Mar (Q4) FY’2025-26
capture within the domestic economy. The growing shift towards complex generics,
injectables, biosimilars, and speciality formulations further indicates movement up
the pharmaceutical value chain
61
.
At the same time, the rising foreign value-added share after 2017 highlights India’s
continued dependence on imported APIs, speciality chemicals, and advanced
pharmaceutical intermediates, particularly from China, which remains the dominant
supplier of key bulk drugs and raw materials. This suggests that while India has
strengthened its position in high-value formulation manufacturing, backward
integration in critical intermediates and fermentation-based APIs remains limited.
The trend underscores the importance of expanding domestic capacities in bulk
drugs and advanced chemical inputs through initiatives such as Production Linked
Incentive (PLI) schemes, bulk drug parks, and technology upgradation programs.
Strengthening these segments would enhance domestic value addition, improve
supply chain resilience, and reduce vulnerability to external disruptions within global
pharmaceutical production networks.
11. Innovation and Research and Development (R&D) in the Pharmaceutical Sector
India’s pharmaceutical R&D ecosystem has expanded steadily over the past decade,
driven by rising private-sector investment, stronger intellectual property frameworks,
and deeper integration into global value chains through complex generics, biosimilars,
and biopharmaceutical development. However, India’s overall R&D intensity remains
low. Gross Expenditure on R&D (GERD) as a share of GDP has stagnated at 0.6–0.7%,
significantly below that of innovation-intensive economies such as China, South
Korea, and the United States. A key constraint behind this gap is the limited role of
the private sector, which contributes only about 36% of total R&D expenditure in India,
compared to nearly 70% in advanced economies, indicating that innovation remains
less firm-driven and more dependent on public institutions
62
.
Patent filings in life sciences, which cover innovations including new drugs, medical
devices, diagnostic methods, genetic engineering techniques, and biotechnological
processes, have risen sharply in India over the past decade, indicating a gradual
strengthening of domestic research and innovation capabilities.
Fig 26: Life science patents granted by filing office (excluding the US and China)
0
500
1000
1500
2000
2500
3000
3500
4000
2013 2015 2017 2019 2021 2023
Germany India Switzerland United Kingdom
Note: Patents include those filed under medical technology, biotechnology, and pharmaceuticals
Source: Our World in Data
61 https://www.bain.com/insights/healing-the-world-a-roadmap-for-making-india-a-global-pharma-exports-hub/
62 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2153547&reg=3&lang=2

43Trade WatchB Jan-Mar (Q4) FY2025-26
For India, patent filings have increased from 440 in 2013 to 3,576 in 2023, significantly
outpacing traditional pharmaceutical innovation hubs such as Germany and
Switzerland in terms of growth momentum. The US and China particularly stand out,
with 31,977 and 61,617 filings in 2023. However, India is among the top ten countries
globally, in seventh position. In comparison, Germany’s filings remained relatively
stable, fluctuating between 495 and 691 during the period, while Switzerland recorded
far fewer filings throughout. India’s filings reflect increasing R&D activity.
A closer look at overall patent applications reveals that non-resident applications
increased from 32,362 in 2013 to 35,306 in 2021, whereas resident applications rose
from 10,669 to 26,267 during the same period, indicating a growing contribution of
domestic applicants to overall patenting activity and suggesting an expansion in local
innovation efforts.
63
Unlike other sectors, R&D in pharmaceuticals is risky, time-consuming (10-15 years), and
capital-intensive, warranting the need for public sector participation. The probability
of obtaining market approval for a drug entering phase I clinical trials ranges from 7%
to 45%, depending on the type of drug and the approval process
64
. In the API segment,
most producers are small and medium enterprises, which limits their ability to achieve
economies of scale. Therefore, achieving viable production levels is also contingent on
economies of scale (Fig 26).
At the micro level, this industrial R&D strength is anchored by large pharmaceutical
firms and an increasingly sophisticated network of Contract Research and
Development Manufacturing Organisations (CRDMOs). These firms have evolved
from being primarily regional suppliers of APIs and generic formulations into globally
integrated partners spanning the full pharmaceutical value chain from early-stage
development and process optimisation to scale-up manufacturing, and commercial
production. This transformation reflects India’s growing role not in breakthrough
drug discovery, but in high-efficiency drug development and execution within global
pharmaceutical pipelines.
India’s Leading Pharmaceutical States
India’s pharmaceutical growth story is heavily concentrated in a few states that
have built deep specialisation over time. Among them, Telangana, Gujarat, and
Maharashtra have emerged as the most prominent centres, shaping the country’s
production capacity, export performance, and integration with global pharmaceutical
value chains.
65,66,67,68
●Strong Manufacturing Base and Industrial Ecosystems: Telangana, Gujarat, and
Maharashtra have built large-scale pharmaceutical manufacturing ecosystems
supported by dense industrial clusters. Telangana accounts for nearly 40% of
India’s pharma production with over 2,000 life sciences companies and 269+
USFDA-approved facilities. Gujarat contributes around 33–40% of production
with 3,000+ units, while Maharashtra accounts for ~14% of production with over
3,800 units.
63 Data reported on WDI Indicators and include all patent applications
64 https://www.oecd.org/en/publications/pharmaceutical-innovation-and-access-to-medicines_9789264307391-en.html
65 https://invest.telangana.gov.in/pharma
66 https://btm.gujarat.gov.in/pharma-health-care-biotechnology.htm
67 https://www.assocham.org/uploads/files/Knowledge%20Report%202024%20(new)%20Final.pdf
68 https://maitri.maharashtra.gov.in/chemical-pharma/

44Trade Watch Jan-Mar (Q4) FY2025-26
●Export Strength and Global Competitiveness: The states are strongly export-
oriented. Telangana is a major global vaccine hub, Gujarat contributes 17–28%
of India’s pharma exports with strong port access, and Maharashtra accounts
for 20–25% of exports with a high number of globally compliant manufacturing
facilities.
●Cluster-Led Growth and Innovation Hubs: Cluster development has been
central to growth. Telangana’s Genome Valley has created a leading life
sciences and biotech hub bringing together firms, research institutions, and
startups. Maharashtra’s pharma clusters across Mumbai–Pune corridor
69
and
other cities have strengthened manufacturing and R&D linkages. Gujarat’s
chemical and pharma clusters in Ankleshwar, Vapi, Dahej, and others provide
strong backward linkages, reducing costs and improving efficiency.
●Presence of Leading Firms and Global Integration: All three states host major
domestic and multinational firms that anchor their ecosystems. Telangana
includes Bharat Biotech, Dr. Reddy’s, and Aurobindo Pharma; Maharashtra
hosts Sun Pharma, Cipla, Glenmark, Pfizer India, and GSK; while Gujarat
benefits from a dense manufacturing base serving global supply chains. These
firms have driven innovation, scale, and export integration.
●Proactive Policy Support and Investment Promotion: Government policy has
played a key role. Telangana’s TS-iPASS and new Life Sciences Policy 2026–30,
Gujarat’s Vibrant Gujarat Global Summit
70
, and Maharashtra’s established
industrial framework have collectively improved ease of doing business and
attracted large-scale investments.
12. Recent Developments in India’s Trade Policies: Key Updates for the
Pharmaceutical Sector
The Government has adopted a comprehensive policy framework to strengthen
India’s pharmaceutical sector by enhancing supply chain resilience, manufacturing
competitiveness, promoting innovation, and improving healthcare access. The
policy approach has focused on reducing import dependence in critical Key Starting
Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients
(APIs) through targeted incentives and infrastructure support, while simultaneously
encouraging investment in high-value pharmaceutical products, medical devices,
and advanced therapeutics. In parallel, the Government has increasingly emphasised
research, innovation, and industry-academia collaboration to support the development
of complex generics, biologics, and next-generation healthcare technologies. On
the demand side, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)
has expanded access to affordable medicines through a nationwide network of Jan
Aushadhi Kendras. Some of the recent developments in the pharmaceutical policies
are as follows:
●PLI Scheme for Bulk Drugs (KSMs/DIs/APIs)
71
: Launched in March 2020,
to reduce dependence on imports of critical APIs, KSMs, and DIs. It has a
financial outlay of ₹6,940 crore (FY 2020–21 to FY 2029–30). The scheme aims to
69 https://deccancentre.org/pages/NDg,
70 https://cdn.vibrantgujarat.com/event/document/1704603587433--y8TNgp86E2dGwF46lshYAut5ZUmFfdP.pdf
71 https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=154206&reg=48&lang=2

45Trade WatchB Jan-Mar (Q4) FY2025-26
promote domestic manufacturing of 41 critical KSMs, DIs, and APIs to address
high import dependence. A total of 48 projects has been selected involving
33 APIs/DIs/KSMs, of which 34
72
have been commissioned as of December
2024. Realised investment of ₹4,253.92 crore has already surpassed the initially
committed ₹3,938.57 crore.
●PLI Scheme for Pharmaceuticals
73,74
: The scheme aims to promote domestic
manufacturing of high-value pharmaceutical products, including complex
generics, biopharmaceuticals, patented drugs, cell-based and gene therapy
products, and key drug intermediates. Incentives are linked to incremental
sales of eligible products over the scheme period. Approved by the Union
Cabinet with a financial outlay of ₹15,000 crore for the production tenure
FY 2022-23 to FY 2027-28, the scheme supports technology upgradation,
quality improvement, common facilities, cluster development, and market
access initiatives. It provides performance-linked incentives to 55 selected
applicants, including 20 MSMEs for manufacturing high-value products under
three categories: (i) biopharmaceuticals, complex generics, gene therapy and
orphan drugs; (ii) APIs, KSMs and drug intermediates; and (iii) anti-cancer,
autoimmune, cardiovascular, anti-diabetic, and in-vitro diagnostic (IVD)
products. The scheme aims to create global-scale champions capable of
penetrating international value chains.
●PLI Scheme for Medical Devices
75
: Recognising Medical devices as a
sunrise sector, the Government launched dedicated initiatives to promote
domestic manufacturing and reduce import dependence. Launched with a
total outlay of ₹3,420 crore (FY 2020-21 to FY 2027-28), the scheme supports
domestic manufacturing of high-end medical equipment in segments such
as radiology, imaging, cancer care, and implants, at an incentive rate of 5%
of incremental sales for five years. The initiative seeks to establish India as
a global manufacturing destination for medical technology products and
strengthen the healthcare manufacturing ecosystem. As of October 2024,
total realised investment under the scheme stood at ₹33,534 crore, nearly
double the originally projected ₹17,275 crore, with incentive disbursements of
₹3,215 crore released to 45 companies. Medical device exports grew from $ 2.5
bn in FY 2020-21 to $ 4.1 bn in FY 2024–25
76
.
●Strengthening of Pharmaceutical Industry (SPI) Scheme
77
: The Department
of Pharmaceuticals launched the Strengthening of Pharmaceutical Industry
(SPI) Scheme to enhance the competitiveness and productivity of Micro, Small
and Medium Enterprises (MSMEs) in the pharmaceutical sector. As a Central
Sector Scheme with an outlay of ₹500 crore (FY 2021–22 to FY 2025–26), the SPI
scheme upgrades existing pharmaceutical clusters and MSMEs to meet WHO-
GMP and Schedule-M standards through three sub-schemes: (i) API-CF, which
funds common facilities such as R&D labs, testing labs, and effluent treatment
72 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2081491
73 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2081491; https://www.pib.gov.in/PressReleasePage.aspx?
74 PRID=2121425; https://www.pib.gov.in/PressNoteDetails.aspx; https://www.pib.gov.in/PressNoteDetails.
aspx?ModuleId=3&NoteId=155082
75 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2081491; https://www.pib.gov.in/PressNoteDetails.aspx
76 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2221080;
https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=157614&id=157614
77 https://www.pib.gov.in/PressNoteDetails.aspx

46Trade WatchB Jan-Mar (Q4) FY2025-26
plants for pharma clusters; (ii) PTUAS, which provides interest subvention of
up to 5–6% or a credit-linked capital subsidy of 10% for MSME pharma units on
loans up to ₹10 crore; and (iii) PPDS, which supports pharmaceutical promotion
and development. Eight MSME cluster projects have been approved under
the API-CF sub-scheme, with three projects under implementation involving
investments of approximately ₹54.7 crore
78
.
●Promotion of Research and Innovation in Pharma MedTech Sector (PRIP)
Scheme
79
: Notified in August 2023 with a financial outlay of ₹5,000 crore,
the PRIP scheme aims to transition the Indian pharma-medtech sector
from cost-based to innovation-based growth. Under Component A, seven
Centres of Excellence (CoEs) have been established, one at each of the seven
National Institutes of Pharmaceutical Education and Research (NIPERs) at
Mohali, Ahmedabad, Guwahati, Kolkata, Raebareli, Hajipur, and Hyderabad,
with a budgetary outlay of ₹700 crore for specialised research in anti-viral/
anti-bacterial drug discovery, medical devices, bulk drugs, flow chemistry,
and novel drug delivery. Under Component B, grants are provided to industry,
MSMEs, and start-ups for R&D in six priority areas, with assistance of up to
50% (capped at ₹100 crore) for Strategic Priority Innovation areas such as rare
diseases, antimicrobial resistance, and pandemic-causing pathogens. As of
July 2025, 106
80
research projects have been approved under the CoEs and a
call for industry proposals of approximately ₹11,000
81
crore has been issued.
13. Industry Insights
82
on Key Constraints Impacting India’s Pharmaceutical Trade
Performance
●Transitioning to High-Value Pharmaceutical Segments: India’s
pharmaceutical exports remain concentrated in volume-based generic
formulations and retail medicaments, while participation in high-growth
segments such as biologics, biosimilars, vaccines, advanced therapies,
hormones, and analogues remains limited. These biomanufacturing facilities
require high capital expenditure which often acts as a challenge for companies
to invest in the long term.
●Limited investment in R&D ecosystem: Investing in the research and
development for pharmaceuticals is high-risk and requires long gestation
periods, making it a risky decision. Globally, pharmaceuticals rank as the
second-largest R&D-investing industry. On average, it takes 10–15 years to
formulate a drug
83
. Indian pharma companies invest approximately 7% of net
sales in R&D, compared to the 15–20% spent by global companies
84
. There is
a need for long-term incentives and funding mechanisms to develop new
products and technologies.
78 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1906357
79 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2121425
80 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2158120
81 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2173970
82 A stakeholder knowledge-sharing session was held to gather industry insights on challenges and strategies for
boosting India’s global competitiveness in the drugs and pharmaceutical sector.
83 https://www.cbo.gov/publication/57126
84 https://invest.up.gov.in/hi/wp-content/uploads/2023/05/thrust-on_020523.pdf

47Trade Watch Jan-Mar (Q4) FY2025-26
●Limited Technology Transfer and Industry-Academia Linkages:
Commercialisation of research remains limited due to inadequate collaboration
among industry, academia, public research institutions, and startups, as well
as inadequate technology transfer mechanisms.
●Delays in Patent Grants Due to Pre-Grant Opposition Proceedings:
Repeated and sequential filing of pre-grant oppositions, coupled with the
delays in judicial processes, absence of clearly defined timelines for assessing
admissibility and disposing of oppositions, leads to significant delays in
patent grants, creating uncertainty for innovators and discouraging long-
term investments in pharmaceutical R&D. Sustained growth in IPR filings
was underpinned by strategic policy and administrative reforms, including
the Patents (Amendment) Rules, 2024, which simplified patent prosecution
by reducing the frequency of filing working statements and streamlining the
pre-grant opposition process.
●High Dependence on China for APIs and Intermediates: Despite having a
sizeable API industry, India continues to rely heavily on imports, especially
for fermentation-based APIs, particularly from China, due to the pricing
advantage for critical APIs, KSMs, and intermediates
85
. The majority of these
API manufacturers are part of the PLI scheme, which, however, would take
time to scale up domestic capacity.
●Non-Tariff Barriers and Regulatory Compliance Burden: Tariffs are often
not the main binding constraint, especially in developed markets. Non-
tariff barriers include issues with product registration timelines, duplicative
inspections, documentation requirements, limited reliance on approvals from
stringent regulators, access to public procurement, pricing and reimbursement
procedures, and the absence of predictable escalation channels. This is
particularly burdensome for MSME exporters with limited capacity. While
these measures are framed as consumer or environmental safeguards, their
cumulative effect functions as a trade barrier.
●Environmental Compliance Costs in API Manufacturing: Globally, the need
for the pharmaceutical sector to focus on environmental compliance is critical.
Concerns around waste disposal, emissions, and resource management
remain necessary for the sector. Stricter CPCB norms, Zero Liquid Discharge
(ZLD) requirements, and effluent treatment obligations have increased
environmental compliance costs for Indian manufacturers. This is especially
critical at the research and development stage, where effluent treatment is
estimated to account for 35-40% of R&D costs.
●Inadequate Integration of Trade Policy with Pharmaceuticals: Several
existing FTAs contain pharmaceutical-related provisions, but the benefits on
the ground are mixed because many provisions remain cooperative in nature.
The recently concluded India-EU FTA has incorporated pharmaceutical-
specific regulatory cooperation clauses, which is a step in the right direction,
but it needs to be widely included across the several FTAs that India is in the
process of ratifying.
85 https://www.biospectrumindia.com/features/73/25074/can-india-reclaim-api-throne-from-china.html

48Trade Watch Jan-Mar (Q4) FY2025-26
14. Way Forward
The analysis highlights that while India’s pharmaceutical sector has strong foundational
advantages in generic manufacturing, scale, and regulatory compliance, its global
competitiveness remains constrained by limited presence in high-value segments.
With global pharmaceutical demand shifting towards biologics, biosimilars, and
precision therapies, aligning India’s pharmaceutical ecosystem with these evolving
market trends will be critical to enhancing its global market share and moving
decisively up the value chain. The following actions are recommended:
●Promote Diversification into High-Value Pharmaceutical Segments: The
Mission Biopharma SHAKTI scheme, launched in 2026-27, marks an important
step in promoting biologics and biosimilars manufacturing. However, a
comprehensive long-term policy framework would be necessary to support
sustained investment, technology development, and scale-up in these high-
value pharmaceutical segments.
●Strengthen the Pharmaceutical Innovation and R&D Ecosystem:
Expanding innovation-linked incentives, public-private research partnerships,
and dedicated pharmaceutical innovation funds, particularly for innovative
drugs, advanced therapies, and biopharmaceuticals, may help address the
long gestation periods and high risks associated with drug discovery and
development. There is a need for greater transparency in the regulatory
framework on aspects such as non-commercial information submitted to
CDSCO and State/UT FDAs, which remains inaccessible. This needs to be
transparent to aid the monitoring of competing applications and enable
timely legal redressal, thereby strengthening the overall innovation ecosystem
●Time-Bound Patent Opposition and Grant Process: Restrict pre-grant
oppositions to a defined period (e.g., 6–12 months from publication) and
prescribe clear timelines for admissibility decisions and disposal of oppositions.
This would reduce delays in patent grants, improve predictability in the IP
regime, strengthen investor confidence, and encourage long-term R&D
investments in innovative drugs and biologics.
●Build Stronger Industry–Academia and Technology Transfer Mechanisms:
Bridging the gap between research and commercialisation requires
institutional mechanisms that facilitate collaboration among industry,
academia, and public research organisations. Establishing technology
transfer offices, promoting collaborative research centres, incentivising joint
intellectual property development, and strengthening start-up incubation
ecosystems may improve the commercialisation of scientific research and
accelerate innovation-led growth.
●Address Non-Tariff Barriers and Strengthen Regulatory Cooperation: As
tariffs become less significant in pharmaceutical trade, regulatory barriers
increasingly influence market access. India should prioritise pharmaceutical-
specific regulatory cooperation in trade negotiations, including mutual
recognition and reliance mechanisms, streamlined product registration
processes, faster approval timelines, and greater transparency in procurement
and reimbursement systems. Dedicated regulatory support mechanisms for

49Trade Watch Jan-Mar (Q4) FY2025-26
MSME exporters may further improve their ability to comply with complex
international requirements.
●Develop a Model Pharmaceutical Chapter for FTA Negotiations: A
standardised pharmaceutical chapter that may serve as a template across
FTA negotiations may be drafted with acute focus on regulatory predictability,
mutual recognition and reliance mechanisms, GMP inspections, product
registration, standards harmonisation, intellectual property cooperation,
and dispute-resolution frameworks. A model chapter would help ensure
greater consistency in negotiations, strengthen market access outcomes, and
systematically address non-tariff barriers affecting pharmaceutical trade.
●Promote Sustainable and Environmentally Compliant Manufacturing:
Strengthening environmental sustainability will be critical for maintaining
global competitiveness. Support for green manufacturing technologies,
common effluent treatment facilities, resource-efficient production processes,
and environmental compliance infrastructure may help reduce the cost
burden on firms while ensuring adherence to increasingly stringent domestic
and international standards. The bulk drug parts setup by the government
must incorporate world-class common effluent treatment, Zero Liquid
Discharge, and solvent recovery systems as standard, converting individual
compliance burdens into shared infrastructure advantages. Cluster-based
environmental infrastructure would be particularly beneficial for MSMEs and
R&D-intensive units.

50Trade Watch Jan-Mar (Q4) FY’2025-26

51Trade Watch Jan-Mar (Q4) FY’2025-26
C.
POLICY AND
GEOPOLITICAL
HIGHLIGHTS

52Trade Watch Jan-Mar (Q4) FY2025-26
C. Policy and Geopolitical Highlights
1. Global Trade–Related Policy Updates
●US Court of International Trade Strikes Down Section 122 Tariffs: Early
May, the US Court of International Trade (CIT) ruled in a 2-1 decision that
the 10% global tariffs imposed by the Trump administration in late February
2026 under Section 122 of the Trade Act of 1974 are unlawful, concluding the
statutory conditions to invoke the authority were not satisfied.
86
The Trump
Administration appealed the decision to the US Court of Appeals for the
Federal Circuit (CAFC), which on May 12, 2026, entered an administrative stay
suspending the CIT’s order while the appeal proceeds
87
.
●Establishment of US-China Boards of Trade and Investments: From May 13
to 15, 2026, President Trump made a state visit to China, his first trip to the
country since 2017. As the cornerstone of agreements reached, the president
chartered two new institutions: the US-China Board of Trade and the US-China
Board of Investment for managing bilateral trade across non-sensitive goods
and a forum to deliberate investment-related issues
88
.
●WTO 14
th
Ministerial Conference (MC)
89
: The WTO’s 14
th
MC was held in
Yaoundé, Cameroon, from March 26–30, 2026, closed without an overall
ministerial declaration and without agreement on its core priorities. Key
discussions covered fisheries subsidies, investment facilitation, digital trade,
agriculture, and WTO reform, against a backdrop of a weakened dispute
settlement system and stalemate in multilateral negotiations. The inability
to reach consensus reflects deepening divisions between major trading
blocs and signals continued erosion of the rules-based multilateral system.
For developing economies, including India, this underscores the growing
importance of bilateral and regional trade agreements as primary instruments
of market access.
2. India’s Trade Policy Developments
●India–New Zealand FTA Signed: India and New Zealand signed a Free Trade
Agreement on April 27, 2026, at Bharat Mandapam, New Delhi. Negotiations
officially started in March 2025, and after five formal rounds of negotiations
and several intersessions, the agreement was concluded in a record 9 months,
making it the fastest-concluded free trade agreement. Under the new terms,
India has offered market access in 70.03% of the tariff lines while keeping 29.97
% tariff lines in exclusion, which covers 95% of New Zealand’s Bilateral Trade
90
.
A key feature of the agreement is New Zealand’s commitment to provide 100%
duty-free access across all tariff lines for Indian exports, significantly enhancing
market opportunities for Indian goods.
86 https://newsonair.gov.in/us-court-of-international-trade-declares-trump-administrations-10-universal-tariff-levied-on-
imports-from-india-other-countries-illegal/
87 https://www.thehindu.com/news/international/us-appeals-court-halts-order-declaring-trumps-global-10-tariff-illegal/
article70973205.ece
88 https://www.whitehouse.gov/fact-sheets/2026/05/fact-sheet-president-donald-j-trump-secures-historic-deals-with-
china-delivering-for-american-workers-farmers-and-industry/
89 https://www.weforum.org/stories/2026/04/mc14-yaounde-wto-trade/
90 https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=158370&ModuleId=3&reg=3&lang=2

53Trade Watch Jan-Mar (Q4) FY2025-26
●India and South Africa Bilateral Cooperation: India and South Africa agreed
to deepen cooperation in a range of future-oriented technology sectors, with
particular emphasis on artificial intelligence, digital infrastructure, advanced
manufacturing, and innovation-led research. The discussions highlighted
opportunities in biotechnology, genomics, vaccine development, health
technologies, and pandemic preparedness, while South Africa expressed
interest in collaborating on renewable energy, hydrogen technologies, and
skills development. The partnership will focus on translating research into
commercially viable and socially impactful solutions through stronger linkages
among research institutions, startups, industry, and innovation ecosystems
91
.
●Exporter Relief Package
92,93
: The DGFT released a new set of foreign trade
policy measures effective April 1, 2026, aimed at supporting exporters amid
global geopolitical disruptions. Key measures include an automatic extension
of export obligations under Advance Authorisation and EPCG cases expiring
between March 1 and May 31, 2026, until August 31, 2026; the removal of the ₹10
lakh per consignment cap for courier exports to encourage small exporters and
cross-border e-commerce; and a special one-time relief measure allowing SEZ
manufacturing units to sell goods in the Domestic Tariff Area at concessional
customs duty from April 1, 2026, to March 31, 2027. These measures collectively
aim to ease compliance burdens, support MSME exporters, and maintain
liquidity for export-oriented firms navigating an elevated-risk operating
environment.
3. Commodity Price Trends
Global commodity prices strengthened considerably through FY’2025–26, with the
overall commodity index rising sharply towards the end of the fiscal year. The increase
was driven primarily by a surge in crude oil, metals, coal, and precious metals prices,
reflecting tightening supply conditions, geopolitical uncertainties, and resilient global
demand in selected sectors.
Crude oil prices remained volatile throughout the year but spiked sharply in the final
quarter, with the APSP crude oil index rising significantly in March and April 2026.
The increase was likely supported by renewed geopolitical tensions, supply-side
disruptions, and concerns over tighter global energy markets. Coal prices also trended
upward during the latter half of the year, reflecting stronger energy demand and
supply constraints across major exporting economies. Food prices remained relatively
stable compared to other commodity groups, recording only gradual increases during
the year. Stable global agricultural production and easing supply-chain pressures
helped contain sharp food inflation despite periodic weather-related disruptions.
91 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2268311&reg=3&lang=2#:~:text=India%20and%20South%20
Africa%20today,next%20phase%20of%20bilateral%20engagement.
92 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2236414&reg=3&lang=2
93 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2247313&reg=3&lang=2

54Trade Watch Jan-Mar (Q4) FY’2025-26
Fig 27: Price indices across key commodity indices0
50
100
150
200
250
300
350
40 0
450
All commodity index APSP crude oil($/bbl) Food index
Coal index Metal index Preci ous Metals Index
Source: World Bank
Industrial metals prices remained strong throughout the year, with the metals
index rising steadily from mid-2025 onward. Strong demand linked to infrastructure
spending, renewable energy expansion, and electric-vehicle supply chains supported
prices of key industrial metals. Precious metals outperformed most commodity
groups during the period, with gold and silver prices rising sharply amid heightened
geopolitical uncertainty
94
, financial market volatility, and strong safe-haven demand.
Continued central-bank purchases and investor hedging activity further supported
precious metals prices through the final quarter of FY’2025–26 (Fig 27).
94 https://economictimes.indiatimes.com/markets/commodities/news/gold-silver-rise-to-near-record-highs-on-lingering-
safe-haven-demand/articleshow/127590401.cms

55Trade Watch Jan-Mar (Q4) FY’2025-26
CONTRIBUTORS
Pravakar Sahoo Programme Director, NITI Aayog
Nalina Sofia T Director, NITI Aayog
Jyotika Nagvanshi Deputy Director, NITI Aayog
Pooja Teotia Consultant-II, NITI Aayog
Mala Parashar Consultant-I, NITI Aayog
Kavya Rao Young Professional, NITI Aayog
Salome Sara Philips Young Professional, NITI Aayog
Kruthi Raj Young Professional, NITI Aayog

NOTES

NOTES

NOTES

59Trade Watch Jan-Mar (Q4) FY’2025-26