1. INTRODUCTION
As India moves
towards its mission of “Viksit Bharat by 2047”, the rapidly growing MedTech and the Pharma sectors form key economic drivers of growth of the Indian Economy. Even as
India supplies approx. 1/5th of global generic drug market India accounts for
less than 2% of global first-in-class drug launches. Again, while India has the
4th largest medical devices market in Asia; by global standards, it is less
than 2% of the global output, and the share of imports is high at 60% of its
overall requirements.
Structural and
Regulatory bottlenecks, with bureaucratic delays, high import dependency in
MedTech and overlapping digital portals – aggregated further by lack of
specialized staff in the regulatory agency, have hampered the scale-up and
global competitiveness of these critical healthcare sectors.
Addressing these
challenges, the Central Drugs Standard Control Organization (CDSCO) has come in
to bring comprehensive Regulatory changes. Driven by the Jan Vishwas philosophy of trust-based governance, it is taking steps to remove the
administrative rigidities and operational bottlenecks to incorporate a modern,
risk-based, and trust-based regulatory framework.
This article explores
the systematic regulatory hurdles that had been stifling innovation and growth
in the Indian Healthcare sector. We provide a detailed analysis of CDSCO’s
policy interventions, evaluating the short-term and long-term implications that
result from compliance requirements. Finally, we try to analyze the overall
impact the CDSCO proposed policies will have on domestic innovation, global
credibility, foreign direct investment, and India's positioning as an
international MedTech and pharmaceutical manufacturing hub.
For the analysis,
we have incorporated the reports and comments from all concerned
stakeholders:
● Govt of India
● Boston Consulting
Group (BCG)
● Former CEO from NITI
Aayog
● Industry experts
● Regulator – CDSCO
2. CURRENT STATUS OF
INDIAN PHARMA AND MEDICAL DEVICES INDUSTRY
As per Annual Report 2025-26 from Government of India
Ministry of Chemicals and Fertilizers Department of Pharmaceuticals, India is
the largest supplier of generic drugs, accounting for about 20 percent of the
global supply. The total annual turnover of pharmaceuticals was ₹4,71,898 crore for
financial year (FY) 2024-25 and has grown at a CAGR of 9.5% since FY21. India
is one of the fastest growing markets in the global medical devices industry,
expected to grow at a CAGR of 15 per cent. India is the 4th largest Asian
medical devices market after Japan, China, and South Korea and among the top 20
global medical devices markets in the world. However, the imports remain nearly
double (at USD 8822 million in 2024-25) to that of exports at USD 4014
million). The FDI growth has however stagnated over the last 5 years with
figures of Rs 12,753 Cr in 2024-25.
3A. REGULATORY CHALLENGES IN THE PHARMA SECTOR
In July 2026, Mr Amitabh Kant, former CEO, NITI Aayog and G20 Sherpa, Govt of India, had highlighted
the following aspects that stifled the growth of the sector:
● Lacking leadership in
innovation
● Increased bureaucracy
● Understaffing – by
end 2023, CDSCO had barely 200 drug inspectors vs sanctioned strength of
500.
● Lack of technical
staff
● Weak lab
infrastructure
● Fragmented approvals
●Overlapping digital
portals, which applicants reported as glitch-ridden and difficult to
comprehend.
As he states,
India, despite manufacturing a fifth of global generic medicines, it accounts
for less than 2% of global first-in-class launches. The author argues it is not
due to lack of money or scientists, but more due to:
● Outdated review
system by Indian Regulators for early phase trials for a new product.
● Lack of dedicated
scientific team to evaluate fast.
● Approval time gets
elongated – leading to shift by drug makers/scientists to countries where they
get approved faster.
Mr Kant had advocated
CDSCO coordinate with Indian Council of Medical Research (ICMR), letting the
latter check the safety and ethics aspects, while the former handles official
licenses, inspections, and monitoring. An MoU under the Health Ministry can
ensure proper coordination between the agencies, leading to better efficiencies
in work.
The similar issues
were echoed by Ms Kiran Mazumdar Shaw, executive chairperson and founder of
Biocon Limited and Mr Soham Sankaran, founder of PopVax, an Indian
biotechnology company, in their commentary in ET, mentioning the following facts:
● It takes 6-12 months
in India to get Regulatory approvals for conducting First-in-Human (FIH)
trials, while US FDA does it in 30 days.
● The early trials of
new drugs shift to US, Australia, and Europe due to delays in India. This
causes loss of intellectual property, clinical talent, investment, and
enterprise value to leave the Indian sub-continent.
● Giving the example of
China, they mentioned it modernized its regulatory process and conducts
>1,000 FIH trials a year (versus under 50 in India).
● Any advantage from
accelerating Drug discovery associated with using AI technology in India would
be wasted if the approval itself takes enormous time.
BCG’s
report on India’s Pharma and Life Sciences Innovation
opportunity highlights the following:
●Over the past
decade, India has seen a more than 4x increase in patent filings, ~1.5x growth
in innovation pipeline assets, a ~1.6x rise in biotech startups, and a sharp
increase in private capital directed toward healthcare innovation.
●This momentum is
being enabled by four converging forces: ~$5.0Bn in government funding,
strengthening academia-industry linkages, an evolving regulatory framework, and
the build-out of shared R&D and manufacturing infrastructure
● Yet, India’s
innovation story remains early and uneven. Much of the current momentum is
concentrated in late-stage translation, while gaps persist in early-stage
research, clinical execution, regulatory consistency, and access to patient
capital. The challenge is no longer whether India can innovate — but whether it
can do so at scale.
● Structural constraints, however, remain
significant. Access to early-stage, patient capital is limited with only
~10-15% VCs in India having deep pharma / biotech expertise, compared to ~60%
in the US. Bench-to-bedside translation from academia remains weak. Execution
gaps in clinical trial infrastructure, regulatory capacity, and domestic supply
chains continue to slow innovation scale-up.
3B. REGULATORY CHALLENGES IN THE MEDTECH SECTOR
BCG’s
report on India’s MedTech sector mentions the following
facts:
● Historically, India
has enjoyed a limited share in Global MedTech manufacturing and exports, at
less than 2% of the global output. The Indian MedTech industry today is ~$16
Bn, accounting for only ~2% of the global market valued at ~$680 Bn. The Indian
market has predominantly relied on imports of medical devices for servicing the
domestic needs.
● Supportive government
policies, financial incentives and streamlined regulations coupled with frugal
innovations and inherent cost advantage in India have enabled a recent uptick
in manufacturing of medical devices in India. Overall production volumes have
gone up, and share of imports has gone down to ~60% (from 80%).
● The report mentions
“With Viksit Bharat 2047, the government has high aspiration for the sector to
be one of the pillars in 'Make in India' thrust - Aspiration to reduce import
dependency to <50% and increase India's share to 10–12% of the global
market.
● Among the
structural challenges being currently faced in India, the report highlights
the issue of Regulatory complexity – classification categories and approval
formats being inconsistent with global markets with additional approvals
required for exports. It harps on the need for India to align regulatory
requirements to support quick global approvals – streamline regulatory
approvals with a single-window approval system and build bridge pathways to
support Indian enterprise achieve global regulatory approvals aimed at exports.
4. REGULATORY CHANGES PROPOSED BY CDSCO TO ADDRESS THE
CHALLENGES:
On both the
Pharmaceutical sector and the MedTech sector, recently, recent policy updates
signal a structural realignment with an intent to address these issues.
A) On
the Pharmaceutical
sector, Dr. Ranga Chandrashekhar, Joint Drug Controller,
CDSCO, mentioned how “CDSCO is moving towards a smarter, risk-based regulatory
approach that reduces and prioritizes intervention, simplifies processes and
applies greater proportionality to compliance, while continuing to safeguard
the quality, safety and efficacy of medicines.”
● For low-risk
actions, only prior intimation (vs prior approval) will be needed – thus
reducing time
● CDSCO’s increasing
use of digital systems for faster processing and improved oversight.
● Decriminalize minor
records keeping offenses.
● Serious drug safety
violations and trafficking will still face strict penalties.
B) On
the MedTech
front, two significant regulatory decisions were proposed,
which have the consequence of raising compliance demand, while simultaneously
opening a faster gateway for medical-device innovation in India.
The reforms by the
CDSCO focus on 2 areas:
● Strengthen
manufacturing facility audits.
● Consider
a test-license waiver for devices in the research and development stage.
While the former
proposal could have issues for small Companies having turnover less than Rs 10
Cr and which constitute nearly 65% of total manufacturers, the latter could
have beneficial impact on the industry where rising FDI points at a huge growth
potential for the sector.
The report also
highlights the steps taken by CDSCO to improve upon the areas where
deficiencies were noted in the July report:
● It is in the
process of significantly increasing its workforce – focusing on bringing in
professionals like engineers, software developers, AI specialists, and clinical
experts - instead of generalists.
● To simplify
processes and reduce time of action, a dedicated medical device approval
department is being created.
● Regulatory and
digital reforms are being initiated through
* Doing
away with permit requirements for early-stage research, prototyping, and
testing
- * Introduction
of formal, internationally aligned guidelines for AI-driven software and
digital health tools
- * Auditing
of manufacturing plants and enforcements of safety standards take a front seat with rising manpower for CDSCO
- * AI
& Digital Processing to automate initial reviews and accelerate export
certifications.
Industry
view: The
industry experts reacted with optimism, mentioning that improved documentation
and tighter quality processes would need initial short-term investments, but
that would have a long-term beneficial impact on the sector as there would be
generation of rising confidence levels among patients and healthcare providers.
Dismissing the fears of the smaller companies, they mentioned increased
regulatory demands could create pressure for partnerships and shared quality
infrastructure. These measures can improve quality, attract investment and
enhance India’s credibility as a global medical-device manufacturing hub.
5. CONCLUSION – EXPECTED IMPACT OF PROPOSED CHANGES BY
CDSCO
Guided by the Jan
Vishwas philosophy, a fast growing Indian
Pharmaceutical and Medical Technology industry, having potential for an even
faster growth prospect, is looking up to the Regulator to initiate reforms that
are modern, transparent, and risk-based but trust-based.
The expected
impacts it may have on these industries are:
● Use of AI and
digital processing for automated reviews, introducing dedicated departments for
processing applications and taking limited risks by doing away with approvals
for low-risk actions – all point towards improving efficiency of the department
by reducing compliance time.
● Innovation, that
was lacking in the sector, gets a boost by waiver of test licenses in the
early-stage research. Introduction of internationally aligned guidelines for AI
and digital health tools ensures prospects of a rise in first-in-class launches
here in India – aided further by red tape removal to lower the processing time
for applications.
● Initiatives like
tightening of manufacturing facility audits, enforcement of stricter safety
standards, and incorporating specialized staff would bolster the credibility of
the sector in domestic and international markets and help boost FDI. These
steps are also expected to ensure higher quality, safety, and efficacy of
medical devices and pharmaceuticals, thereby generating confidence among
healthcare professionals and patients alike.
● The stricter audits
and documentation processes may well have a short-term cost, but it will have a
long-term impact on improving credibility among customers, ensure compliance
and streamline export certifications. This would again augur well for the
sector in the global market.
● Even as there are
apprehensions about the adverse impact of the stringent audit rules on SMEs,
this regulatory push is expected to foster industry consolidation, encourage
partnerships, shared quality infrastructure, and collaborative models to meet
compliance demands
● Finally for Regulators and Government agencies,
incorporating specialized staff, proper alignment with ICMR, and digital
modernization would ensure higher efficiency for the Regulator by getting rid
of bureaucracy – necessary for growth in the sector.
