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As India’s pharma prowess grows, its South Asian neighbours walk the fine line between benefiting from humanitarian aid and enduring strategic dependence.
One of the most significant developments in global healthcare supply chains has been India’s emergence as the “Pharmacy of the World”, with pharmaceutical exports reaching US$30.47 billion in FY2025, marking a 9.4 percent year-on-year growth. This has placed India as the third-largest pharmaceutical producer in terms of volume globally through its contribution of 20 percent of the world’s generic drug exports and an estimated 60 percent of global vaccine supplies. However, it is essential to look beyond these impressive statistics, which reveal the intricate web of strategic interdependencies that extend beyond commercial exchanges and are particularly evident in India’s relations with its South Asian neighbours.
The scale of India’s pharmaceutical industry is unprecedented in developing countries. There are over 10,500 manufacturing facilities, and the highest number of United States Food and Drug Administration (US-FDA) approved plants outside the US, which makes India’s pharmaceutical production capacity the most formidable in the global markets. India’s export portfolio is dominated by drug formulations and biologicals, accounting for approximately 75.2 percent of total pharmaceutical exports, followed by bulk drugs and intermediates, amounting to 16 percent. The key factor contributing to a competitive advantage in the industry is cost-effective production capabilities. India boasts manufacturing costs that are 33 percent lower than those in the US, which enables the country to supply 40 percent of the generic drugs consumed in the American market.
India’s pharmaceutical diplomacy became most visible during the COVID-19 pandemic through the “Vaccine Maitri” initiative, launched on 21 January 2021.
India’s pharmaceutical diplomacy became most visible during the COVID-19 pandemic through the “Vaccine Maitri” initiative, launched on 21 January 2021. This programme, largely viewed as humanitarian aid, provided 98 countries with 162.9 million vaccine doses, out of which 14.3 million doses were donated as grants. Most significantly, India’s neighbours in South Asia received 29.44 percent of the total distribution.
Pharmaceutical dependencies prevalent in India's South Asian neighbours reveal a stark pattern of asymmetrical relationships. The most acute dependency is observed in Nepal, which imports virtually all its pharmaceutical products from India owing to its limited manufacturing capability and landlocked geography. Furthermore, as a trading partner and in accordance with the guidelines of SAFTA (South Asian Free Trade Agreement), India provides Nepal with duty-free access to pharmaceutical commodities, making Nepal the largest exporter of such products. A similar scenario also occurred in the case of Bhutan, as it imports all categories of drugs, medical equipment, and healthcare supplies from India. Its small market size and scarcity of manufacturing infrastructure make domestic production economically unsustainable, resulting in absolute reliance on Indian imports for essential medicines and vaccines. The bulk of drugs imported by Nepal are vital cancer drugs, while Bhutan depends on India for neuropsychiatry medicines.
Pharmaceutical dependencies prevalent in India's South Asian neighbours reveal a stark pattern of asymmetrical relationships.
Bangladesh exhibits a more complex case in this regard. Here, 98 percent of local demand has been fulfilled by domestic production since the 1980s; however, outright dependency remains on India for Active Pharmaceutical Ingredients (APIs). Over 80 percent of APIs are imported from India. Therefore, despite domestic manufacturing facilities having the capacity to serve more than 150 countries globally, the pharmaceutical industries in Bangladesh grossly rely on Indian APIs for the production of essential drugs.
Apart from this, Sri Lanka’s pharmaceutical supply chain demonstrates moderate but overall significant dependence on India for generic medicines and vaccines. According to a 2025 assessment by the Asian Development Bank, glaring vulnerabilities have been highlighted in Sri Lanka’s system of pharmaceutical procurement and distribution, underscoring the need to improve supply chain resilience. A significant volume of drugs imported by Sri Lanka is dominated by cardiovascular drugs targeted towards the treatment of hypertension.
In this context, it must also be noted that sole dependence on India for pharmaceutical products creates significant health security vulnerabilities in the countries of South Asia, with the most pertinent of them being supply chain disruptions. First, as South Asian countries are overly reliant on Indian pharmaceutical products, any unprecedented stress on supply chains, such as a sudden disruption or an abrupt change in export policy, can directly jeopardise healthcare systems in these countries and therefore their ability to provide essential drugs to their populations. Second, there is also the issue of quality control, as there have been recent incidents involving contaminated pharmaceutical products from Indian manufacturers. There have been cases of eye drops linked to severe infections reported in the US, as well as cough syrup associated with child fatalities in Gambia, highlighting the potential risks of such outright dependencies.
Sole dependence on India for pharmaceutical products creates significant health security vulnerabilities in the countries of South Asia, with the most pertinent of them being supply chain disruptions.
India’s export of pharmaceutical products goes far beyond serving commercial interests. Many scholars view it as a tool for projecting soft power and enhancing regional influence. The ‘Vaccine Maitri’ initiative stated above exemplified this dualism by demonstrating that this initiative was employed by India not only to enhance its image as a benevolent regional leader but also to exert strategic influence. During the COVID-19 pandemic, India’s abrupt halt in vaccine exports in April 2021 exposed grave health security vulnerabilities of its neighbours in South Asia. This decision left India’s South Asian neighbours in a deadlock as they were already in critical phases of their vaccination campaigns, forcing them to turn to alternative suppliers, primarily China, underscoring how India’s pharmaceutical dominance extends beyond commerce and actively shapes regional health resilience and geopolitical dynamics.
All these developments were taking place against the backdrop of escalating border tensions between India and China, triggering broader deteriorations in Sino-Indian relations. Therefore, India’s vaccine export suspension not only had public health considerations but also carried profound geopolitical implications. By December 2022, China had supplied 1.1 billion vaccine doses to 123 countries (as either bulk substances or finished doses), with a significant share going to Pakistan, Bangladesh, Sri Lanka, and Nepal. The implications of this suspension were threefold. First, it revealed the fragility of India’s pharmaceutical diplomacy as a means of asserting regional influence. Second, it showed that even humanitarian commitments can falter under domestic political pressures, highlighting the risks of excessive dependence on an external supplier. Third, it reshaped South Asia’s strategic landscape by positioning China as a dependable partner in the supply chain of global public goods.
India’s export of pharmaceutical products goes far beyond serving commercial interests. Many scholars view it as a tool for projecting soft power and enhancing regional influence.
This analysis intends to highlight several important policy implications for India and its South Asian neighbours. For India, the challenge lies in finding a balance between its commercial interests and its role as a regional leader and dependable supplier of pharmaceutical products. India must develop more robust mechanisms to ensure an uninterrupted supply of pharmaceuticals during crises, to safeguard its credibility, which was on trial during the temporary suspension of vaccine exports during the pandemic.
For the countries of South Asia, there is a critical need to diversify the supply sources of pharmaceutical products and, more importantly, to develop regional manufacturing capabilities to mitigate strategic vulnerabilities. Bangladesh’s success in achieving near self-sufficiency in drug production—meeting nearly 98 percent of domestic demand through local manufacturers—offers a vital model for emulation by other countries seeking pharmaceutical production autonomy. However, individual efforts may prove to be insufficient. This essay stresses the need for a coordinated regional approach in not only the production of drugs but also policy support, harmonising regulatory frameworks, and technology absorption. An institutional framework for such collaboration already exists—the South-East Asia Regulatory Network (SEARN) established by the World Health Organization (WHO) in 2016, consisting of 11 member states, including India, Bangladesh, Bhutan, Nepal, and Sri Lanka. By leveraging platforms such as this, South Asian nations can reduce quality issues, accelerate access to safe medicines, and collectively engage in technology transfer, enhancing pharmaceutical autonomy.
For India, the challenge lies in finding a balance between its commercial interests and its role as a regional leader and dependable supplier of pharmaceutical products.
Most importantly, to build pharmaceutical resilience among South Asian nations, it is essential to move beyond the donor-recipient dichotomy towards a shared model of responsibility, autonomy, and interdependence. This demands not only institutional cooperation but also staunch commitment to transparency, equity, and long-term investment in health sovereignty. It is only through such a strategy that South Asian nations can ensure for themselves uninterrupted access to essential drugs and reduce vulnerability to external shocks.
Anasua Basu Ray Chaudhury is a Senior Fellow at the Observer Research Foundation.
Subhangi Mukherjee is an Intern at the Observer Research Foundation.
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Anasua Basu Ray Chaudhury is Senior Fellow with ORF’s Neighbourhood Initiative. She is the Editor, ORF Bangla. She specialises in regional and sub-regional cooperation in ...
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Subhangi Mukherjee is an Intern at the Observer Research Foundation. ...
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