India’s pharmaceutical PLI schemes have beaten their investment targets and Chinese import dependence has gone up anyway. Against ₹46,744 crore of PLI investment recorded by June 2026, China’s share of India’s API, KSM and intermediate imports rose from 68.2% in FY21 to 73.7% in FY25, with the import value climbing from ₹18,646 crore to ₹27,032 crore. Any sourcing strategy built on the assumption that the scheme has already de-risked Indian supply is working from the wrong premise. retailintel
What the scheme actually funds
The government’s response to post-pandemic supply shock had two parts: a ₹6,940 crore production-linked incentive scheme for bulk drugs, and a separate ₹3,000 crore scheme for bulk drug parks. Incentives are paid on a percentage of incremental sales over a 2019–20 baseline, tapering across the scheme’s life, and cover more than 25 KSMs, drug intermediates and APIs including Penicillin G, 7-ACA and clavulanic acid. industry-reportnationalacademies
Funding has arrived, and India is successfully bringing back the production of core medicine ingredients. By August 2025, companies invested ₹4,709 crore into the government’s bulk drugs incentive scheme (PLI), far exceeding the original target of ₹3,938.5 crore. Thanks to this money, local factories have already set up the capacity to make 26 different raw drug materials and ingredients. Crucially, India has restarted making fermentation-based antibiotics at home for the first time in 20 years, a critical category of medicine that the country had completely stopped manufacturing.
Why the headline number hasn’t changed
The real issue starts much earlier in the supply chain. Building a new medicine factory in India does not solve the risk if the core raw materials still come from just one supplier in China. Even though the final steps happen in India, the country remains dependent on China.
India still needs to build a reliable domestic supply of these materials. This is why some new facilities set up under the “China Plus One” strategy continue to depend on Chinese suppliers for their KSMs.
There are two other challenges. First, Chinese suppliers have historically lowered prices for key materials and bulk drugs when Indian manufacturers increase local production. This can make it harder for new Indian plants to compete and operate at full capacity.
