In a strategic move aimed at safeguarding the Indian pharmaceutical sector, the Government of India is planning to introduce a Minimum Import Price (MIP) on a set of critical pharmaceutical raw materials. This measure is designed to curb the impact of cheap imports, particularly from China, and reinforce the country’s self-reliance goals under the Production-Linked Incentive (PLI) scheme.
What is MIP and Why It Matters
Minimum Import Price (MIP) serves as a trade regulation tool, working alongside customs duties to raise the minimum price at which a product can be imported. By enforcing MIP, the government intends to shield domestic manufacturers from being undercut by low-cost imports and encourage local production of essential raw materials.
Key Highlights of the Proposal
| Aspect | Details |
|---|---|
| Objective | Protect Indian pharmaceutical manufacturers from cheap imports, especially from China. |
| Definition of MIP | Regulatory mechanism that sets a floor price for imports, supplementing customs duties to protect domestic industry. |
| Coverage | Expected to cover ~10 key pharmaceutical raw materials, including drug intermediates and active pharmaceutical ingredients (APIs). |
| Drugs Impacted | Mainly antibiotics and anti-cholesterol formulations. |
| Policy Framework | Linked to the Production-Linked Incentive (PLI) scheme aimed at boosting domestic API/intermediate production. |
| Industry Concerns | Potential rise in raw material prices could increase finished product costs, affecting affordability and export competitiveness. |
| Historical Precedent | India had earlier imposed MIP on soda ash and other goods to control import surges. |
| Status | Policy under active discussion with stakeholders; final implementation decision awaited. |
Industry Implications
While the proposed MIP could be a boon for API manufacturers, finished formulation players are concerned about margin pressures due to increased input costs. This could pose challenges, particularly for export-focused companies operating on thin margins.
Strategic Significance
India currently imports over 65% of its bulk drug requirements from China. Reducing this dependence has become a policy priority, especially after supply chain disruptions witnessed during the COVID-19 pandemic. The PLI scheme and the MIP initiative work in tandem to achieve this strategic goal.
Conclusion
The introduction of a Minimum Import Price on select pharmaceutical raw materials represents a critical step towards India’s broader ambition of becoming a global pharmaceutical powerhouse. While the move seeks to empower domestic manufacturing, its success will depend on striking a balance between self-reliance and global competitiveness.
Glottis Limited 
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