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India treats energy and defence as strategic priorities, yet its deep dependence on Chinese medicines, APIs, and medical devices leaves a critical gap in health security.
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India is the 'pharmacy of the world,' exporting about 20 percent of global generic medicines by volume and over 60 percent of global vaccine demand. This achievement, however, masks a critical vulnerability. The COVID-19 pandemic was not a one-off shock but a stress test that exposed how even the pharmacy of the world is deeply exposed to global disruptions. As Chinese factories shut down in early 2020, India’s pharmaceutical supply chains struggled. In March 2020, India had to restrict the export of 26 drugs, including paracetamol and antibiotics, to avoid domestic shortages when key starting materials (KSMs) stopped arriving from China. It became clear that decades of efficiency-driven globalisation had led to structural dependence on a small set of foreign suppliers. In particular, China emerged as the single critical link in many of India’s health supply chains. The pandemic served as a wake-up call, underscoring that India’s vaunted self-reliance in pharmaceuticals was 'interdependent' self-reliance and was susceptible to disruption by external tremors.
India’s dependence on China in the medical sector covers the entire gamut of the industry, from basic chemicals to high-tech devices. The India-China trade numbers reveal only a part of the story. India’s trade deficit with China increased to a record of US$99.2 billion in 2024-25. The excess of imports was mainly composed of pharmaceuticals, APIs, electronics, and other essential products. According to one analysis, China now “dominates India’s import baskets across virtually every industrial category".
In the health sector, Indian drug makers continue to source around two-thirds of their key active pharmaceutical ingredient (API) requirements from China. In 2018 alone, about 67.5 percent of the raw materials for drug formulations by value were imported from China, and that reliance has only grown. By 2024, roughly 87 percent of India’s imported antibiotic ingredients by value came from China, which is a stark rise from the mid-2000s when the figure was closer to 60 percent. In other words, India’s import dependence on China for crucial antibiotics has become nearly total, a trend mirrored in other drug categories.
By 2024, roughly 87 percent of India’s imported antibiotic ingredients by value came from China, which is a stark rise from the mid-2000s when the figure was closer to 60 percent.
Even intense geopolitical rivalry has not severed these supply links. Political tensions have not ended India’s reliance on Chinese health inputs. China is still the main factor affecting the whole process from raw chemicals to the pharmacy shelf. In some cases, China’s grip reveals a near-monopoly. One study found that China supplies 97.7 percent of India’s needs for certain antibiotics like erythromycin.
India’s fast-growing medical device market, worth over US$11 billion, also relies on imports for over 70 percent of its needs. China has become the single largest source, accounting for a large share of these imports (~20 percent of total). Many monitors, imaging machine components, disposables, and low-cost diagnostics are made in China or assembled from Chinese parts. As a result, even basic hospital hardware is entangled in dependence. According to industry representatives, key components for products like ventilators still have to be imported because local manufacturing of those high-tech parts is underdeveloped.
The upstream technology ecosystem, such as semiconductors for medical electronics, rare-earth magnets for Magnetic Resonance Imaging (MRI) machines, and specialised sensors for Intensive Care Unit (ICU) equipment, all trace back to Chinese supply lines. China’s dominance in electronics and materials (for instance, controlling nearly 97 percent of India’s silicon wafer imports used in many devices) reinforces that China is on the critical path to the hospital bedside as well. India’s healthcare sector is thus quietly chained to China’s supply chain, representing a dependence with profound implications.
India’s heavy import dependence can turn any trade disruption into a health security vulnerability. In an era of great-power competition, uncertainty about critical health inputs can prove to be as destabilising as uncertainty about energy or food supplies. The real-world consequences of such supply interruptions can be dire. Over time, these supply insecurities also carry a public health cost. For example, shortages of first-line antimicrobials may lead to overuse of substitute antibiotics, which are broader-spectrum or less optimal. This practice fuels antimicrobial resistance (AMR), where bacteria develop resistance faster, especially when doctors are forced to use 'reserve' drugs inappropriately. Thus, a supply chain hiccup today can also sow the seeds for a drug-resistance crisis tomorrow.
Shortages of first-line antimicrobials may lead to overuse of substitute antibiotics, which are broader-spectrum or less optimal. This practice fuels antimicrobial resistance (AMR), where bacteria develop resistance faster, especially when doctors are forced to use 'reserve' drugs inappropriately. Thus, a supply chain hiccup today can also sow the seeds for a drug-resistance crisis tomorrow.
Supply chains can also become strategic chokepoints. China could use its dominance to turn medical supply shipments into a tool of pressure during political stand-offs. If tensions spike, India faces the risk, even if presently theoretical, of a health supply squeeze. The COVID-19 shock should therefore accelerate a shift in mindset, and critical medicines and devices should be seen as integral to national security.
India has now started treating certain health-related imports as strategic assets that require policy support. The government has initiated various measures over the last few years to promote self-reliance in the pharmaceutical and MedTech sectors. One such flagship programme is the Production Linked Incentive (PLI) scheme, which is aimed at the domestic manufacturing of bulk drugs (APIs), KSMs, and medical devices. The PLI programme, which was started in 2020, with a financial commitment of INR 6,940 crores, provides monetary incentives to companies that produce the specified critical inputs locally. The preliminary results are quite promising: as of 2024, the PLI scheme has facilitated the completion of 32 projects for the production of new API/KSM with an additional annual capacity of 56,679 metric tonnes. This is a significant infusion of local supply. An additional 16 projects are under development, backed by both large firms and smaller manufacturers.
Similar moves are underway in medical technology. The government approved a National Medical Devices Policy in 2023, which aims to accelerate the growth of the sector and also reduce imports. This policy, along with a Medical Devices PLI scheme, encourages the manufacturing of items such as imaging equipment, implants, diagnostic kits, and wearables in India. There should also be a discussion on a 'China+1’ strategy, but from an Indian perspective: sourcing components from alternate countries (or domestically) to avoid single-country concentration. These policies have yielded some early successes. A few bulk drugs that were, until recently, over 95 percent imported — such as fermentative antibiotics like penicillin — are now being produced domestically on a pilot scale. However, building upstream pharmaceutical capacity can be capital-intensive and environmentally sensitive. It can be difficult to quickly recreate supply chains that took China decades to build. Additionally, there is an issue of affordability: local production is often more expensive than imports, at least in the initial period. This is where smart policy design becomes indispensable.
A few bulk drugs that were, until recently, over 95 percent imported — such as fermentative antibiotics like penicillin — are now being produced domestically on a pilot scale. However, building upstream pharmaceutical capacity can be capital-intensive and environmentally sensitive.
Despite the flurry of initiatives, gaps remain in India’s quest to de-risk its health supply chains. Unlike oil or food, India still lacks a unified, constantly updated dashboard of its critical health import dependencies. Another issue is that procurement practices don’t always align with the strategic goal. Both government tenders and private hospitals often award contracts to the lowest bidder, which usually means an imported product, given China’s cost advantage. As a leading voice in the Global South, India also has the opportunity to spearhead joint efforts with other developing countries to secure health supplies. This could mean coordinating with partners in Africa, Latin America, and Southeast Asia to pool procurement or co-produce.
Going forward, India should delineate a National Health Security List — a list of critical medicines (and their APIs/KSMs), vaccines, medical devices, and even health-related digital systems/components that are vital to national health security. This list would identify which items are so critical that their shortage would be a strategic threat. Second, all relevant policies should be aligned to prioritise supply security for items on this list. If an item is deemed critical, India should ensure it has at least two or three reliable sources, whether domestic or from a diversified import base.
As a leading voice in the Global South, India also has the opportunity to spearhead joint efforts with other developing countries to secure health supplies. This could mean coordinating with partners in Africa, Latin America, and Southeast Asia to pool procurement or co-produce.
Third, India can establish strategic stockpiles or buffer reserves for the most critical health items, similar to the strategic petroleum reserve for oil. A minimum stock of anti-infective APIs or personal protective equipment can be maintained, with a rotation system to keep supplies fresh. Finally, India can lead by example in international forums to push for collective resilience measures such as advocating for cooperative bulk buying mechanisms, information-sharing on shortages, and perhaps an international agreement to exempt critical health goods from export bans as far as possible.
China’s outsized role in India’s medical supply chains will not vanish overnight, nor does it need to become adversarial. However, India must decide whether these enduring links remain a convenient feature of global trade or a structural point of vulnerability. By viewing health and medical supplies as integral to national security, India can begin to make that choice. The coming years will test how effectively India can fortify its medical supply lines, ensuring that the next health crisis finds the nation far better prepared.
K.S. Uplabdh Gopal is an Associate Fellow with the Health Initiative at the Observer Research Foundation.
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Dr. K. S. Uplabdh Gopal is an Associate Fellow within the Health Initiative at ORF. His focus lies in researching and advocating for policies that ...
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