A government decision could increase the price of medicines in the country, affecting the MSME sector
The imposition of minimum import prices on some essential raw materials for medicines could lead to higher prices in India. This decision could significantly impact small pharmaceutical units and put thousands of jobs at risk.
After reducing the GST rate nationwide, the government has now decided to impose a Minimum Import Price (MIP) on raw materials used in the pharmaceutical sector, or pharmaceutical inputs.
This could lead to higher drug prices in the country. Several pharmaceutical industry experts have expressed concern over this government decision.
They say that imposing MIP on certain essential raw materials will increase the cost of APIs (active pharmaceutical ingredients) and pharmaceutical companies. This increased cost will directly impact patients, leading to higher drug prices.
According to an ET report, the proposal aims to reduce large-scale imports of raw materials from countries like China, as this could impact the sustainability of India's domestic manufacturers.
However, many medical experts are calling this move detrimental to the Indian pharmaceutical sector. The government is currently considering setting MIPs for penicillin G, 6APA, and amoxicillin. Industry officials say that imposing MIPs on these essential ingredients used in antibiotics would have a significant impact on MSMEs.
According to the report, this could affect more than 10,000 MSME units, forcing many to close. This could result in the loss of jobs for approximately 200,000 people.
In September, the government set a minimum import price of $111 per kilogram for ATS-8 until September 30, 2026. A month later, the government also announced an MIP of ₹1,174 per kilogram for sulfadiazine until September 30 of next year.
Positive Side
Some experts see this move by the government as a strong signal towards a self-reliant India, as the Indian pharmaceutical industry is heavily dependent on China for raw materials.
In 2020, the government launched the Production-Linked Incentive (PLI) scheme to reduce this dependence and encourage domestic companies to increase investment in the production of essential raw materials.
However, industry experts say the PLI scheme was not designed to control the prices of 6APA or amoxicillin. If MIP is used now, it could send the message that PLI recipients want additional protections or benefits beyond the scope of the scheme.