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India’s API Industry Set for Steady Expansion, CareEdge Projects 5–7% Growth Through FY28

Policy support, rising healthcare demand and a shift toward complex APIs are expected to drive moderate growth in India’s active pharmaceutical ingredient sector

• By PharmaNews Live Desk
• New Delhi
• Mar 05, 2026

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India’s active pharmaceutical ingredient (API) industry, currently valued at around $15–16 billion, is expected to grow at a compound annual growth rate (CAGR) of 5–7 per cent through FY28, according to a report by CareEdge Ratings.

The report indicates that the sector is entering a period of stable expansion, supported by favourable government policies, rising domestic demand and the pharmaceutical industry’s increasing focus on complex and high-potency APIs.

CareEdge said the next phase of growth will be driven by demographic and healthcare trends such as an ageing population, expanding healthcare access, growing insurance penetration and a higher prevalence of chronic diseases.

Shift toward complex and high-potency APIs

A structural shift within the industry is also reshaping the growth outlook. Pharmaceutical companies are gradually moving away from basic bulk drug manufacturing and focusing on high-potency APIs and complex molecules.

According to the report, firms are transitioning to more specialised APIs to counter price erosion, improve margins and strengthen customer retention in global markets.

The development of new pipelines for high-potency and complex APIs is expected to push the industry further up the value chain, although many projects are still in early stages and commercialisation is likely to take time.

China dependence remains a key challenge

Despite India’s strong position in global pharmaceuticals, the API sector continues to face structural challenges, particularly dependence on imports for key starting materials (KSMs).

India imports around 30–35 per cent of its API requirements, with China accounting for roughly 70 per cent of those imports, highlighting continued supply-chain vulnerabilities.

China’s dominance in bulk drug manufacturing stems from decades of cost-efficient large-scale production, supportive policies and access to relatively inexpensive resources.

Policy push to strengthen domestic manufacturing

To reduce import dependence and strengthen domestic production, the Indian government introduced several policy initiatives, including the Production-Linked Incentive (PLI) scheme for bulk drugs and the development of bulk drug parks.

The CareEdge report noted that more than 30 projects under the scheme have already been completed, with several pharmaceutical companies inaugurating new manufacturing capacities.

However, analysts say the full impact of these initiatives may take time to materialise, as many projects are still ramping up production.

Technology and modern manufacturing shaping the sector

Indian API manufacturers are also investing in technology-driven production methods, including artificial intelligence, data analytics and advanced flow-manufacturing techniques.

These technologies are expected to improve efficiency, enhance sustainability and support the industry’s long-term competitiveness.

With increasing demand from regulated and emerging markets, the report suggests that the sector’s transformation toward more specialised APIs could begin to generate stronger growth over the next few years.