India’s Minimum Import Price Policy for Pharma: Why Domestic Drugmakers Are Still Waiting for Results

Introduction

India’s Minimum Import Price (MIP) policy was designed with a clear purpose to protect domestic pharmaceutical manufacturers from the flood of low-cost imports, particularly from China, and to encourage local production of critical drug ingredients.

Months into its implementation, however, the industry is still waiting for the policy to make a real difference. Buyers are cautious, domestic capacity sits underutilised, and existing imported stockpiles continue to suppress demand for locally made alternatives.

In this post, we break down what the MIP policy covers, why it has had a slow start, and what pharmaceutical businesses need to do right now.

What Is India’s Minimum Import Price Policy?

The Minimum Import Price (MIP) is a trade protection measure introduced by the Government of India that sets a price floor on certain imported pharmaceutical raw materials and intermediates. Imports cannot legally enter the Indian market below these fixed price thresholds.

The policy targets a well-documented problem: Chinese manufacturers have long been able to supply bulk drugs and APIs to India at prices that domestic producers simply cannot match, not because Indian manufacturers are inefficient, but because of structural subsidies and economies of scale that artificially suppress Chinese export prices.

By introducing minimum price thresholds, the government aims to:

• Discourage imports priced below the cost of sustainable domestic production
• Counter alleged dumping by overseas manufacturers
• Create a commercially viable environment for Indian API and bulk drug producers
• Reduce India’s dangerous over-reliance on imported pharmaceutical inputs

Which Products Are Covered Under the MIP?

The MIP framework currently covers three key pharmaceutical inputs:

1. Diluted Potassium Clavulanate

Minimum Import Price: USD 180 per KGA

Used in combination antibiotics such as amoxicillin-clavulanate (commonly sold as Augmentin).

2. ATS-8 (Key Statin Intermediate)

Minimum Import Price: USD 111 per kilogram

A critical intermediate in the production of cholesterol-lowering statin drugs.

3. Penicillin G

Covered under the broader MIP initiative.

One of the most foundational antibiotic raw materials, long dominated by Chinese suppliers in the Indian market.

Policy validity: All current MIP measures are effective until 30 November 2026.

Why Has the Policy Had a Slow Start?

Despite a sound policy rationale, early market feedback shows that the MIP has not yet delivered the commercial benefits domestic manufacturers were expecting. Three key reasons explain this:

1. Buyers Are Reluctant to Switch

Procurement teams across the pharmaceutical supply chain remain hesitant to shift sourcing strategies. Long-standing supplier relationships, established quality expectations, and price sensitivity mean that many buyers are not yet transitioning to domestic alternatives even where they are available.

2. Imported Inventory Is Still in the Pipeline

A significant volume of imported raw materials purchased before MIP thresholds came into force is still working its way through the supply chain. As long as that inventory exists, buyers have little urgency to look elsewhere. The real test of the policy will come once those stockpiles are fully depleted.

3. Domestic Production Capacity Remains Underutilised

The direct consequence of slow demand is that Indian manufacturers are running well below their production potential. This is the very scenario the MIP was meant to prevent. Domestic producers invested in capacity anticipating stronger demand, demand that has yet to materialise at scale.

The Bigger Picture: India’s Import Dependency Problem

India currently imports approximately 80% of its bulk drug requirements, with the vast majority sourced from China. This level of dependence has been flagged repeatedly as a strategic vulnerability one that was exposed starkly during the COVID-19 pandemic when global supply chains faced severe disruption.

The MIP policy is part of a wider government push to reverse this trend, which also includes:

• The Production Linked Incentive (PLI) Scheme for bulk drugs and APIs
• Dedicated Pharma Clusters to support manufacturing infrastructure
• Push for self-reliance (Atmanirbhar Bharat) in critical health inputs

Together, these measures represent a long-term structural shift in how India intends to secure its pharmaceutical supply chain.

Countering Dumping: The Core Intent of the MIP

A central motivation behind the MIP is to address alleged dumping, the practice of exporting goods at below-cost or below-market prices to gain market share and undercut local competitors.

Chinese manufacturers, backed by substantial state support, have been able to supply key APIs and intermediates to India at prices that domestic producers are structurally unable to match. The MIP attempts to correct this imbalance by making artificially low import prices illegal.

Whether this works in practice depends on robust enforcement at the customs level and whether buyers genuinely redirect procurement toward domestic suppliers once the price differential narrows.

What This Means for Your Business

If your organisation operates in the pharmaceutical supply chain as an importer, API manufacturer, formulation company, contract manufacturer, or distributor, the MIP has direct implications across several areas:

Sourcing & Procurement

Review your current supplier mix for MIP-covered inputs. If you are still importing potassium clavulanate, ATS-8, or penicillin G, confirm that your contracted import prices are at or above MIP thresholds to avoid customs clearance issues.

Cost & Margin Planning

For businesses that have relied on low-cost Chinese imports, the MIP will affect landed costs. Factor the revised pricing into your product costing, tender submissions, and margin planning.

Regulatory Compliance

Ensure that all import declarations, commercial invoices, and customs documentation correctly reflect MIP-compliant pricing. Non-compliance can result in shipment delays, penalties, or rejection at the port of entry.

Supplier Diversification

Begin evaluating qualified domestic suppliers for MIP-covered inputs. Even if switching is not immediately necessary, having an approved domestic alternative in your supply chain reduces future risk.

Outlook: Will the MIP Eventually Work?

The general consensus among industry observers is cautious optimism. The slow start appears to be driven by transitional factors inventory overhang and buyer inertia rather than a fundamental flaw in the policy’s design.

As existing import stockpiles are consumed and supply contracts come up for renewal, domestic suppliers should see a gradual increase in demand. The critical variable is whether Indian manufacturers can scale production quickly enough and at consistent quality standards to meet that demand when it arrives.

The November 2026 deadline also means that the government will need to decide whether to extend, expand, or allow the MIP to lapse. That decision will be watched closely across the industry.

Key Takeaways

• India’s MIP policy sets minimum import prices for potassium clavulanate (USD 180/KGA), ATS-8 (USD 111/kg), and penicillin G
• The policy is designed to counter alleged Chinese dumping and reduce India’s 80% import dependency on bulk drugs
• Early adoption has been slow due to buyer caution and existing inventory still in the supply chain
• Domestic manufacturing capacity remains underutilised despite the policy’s intent
• Businesses should review procurement strategies, compliance documentation, and supplier diversification plans now
• MIP measures are valid until 30 November 2026

Need Help Navigating India’s MIP Regime?

At Omega QMS, we help importers, manufacturers, and global pharmaceutical businesses stay ahead of evolving trade and regulatory requirements in India from compliance strategy and import documentation to market access and regulatory affairs.

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