The Indian government is actively considering a one-year extension for small and medium-scale drug manufacturers to comply with stringent new quality norms, aiming to prevent widespread disruptions in the country's vital pharmaceutical sector. This move comes as thousands of Micro, Small, and Medium Enterprises (MSMEs) face significant challenges in upgrading their facilities to meet the revised Good Manufacturing Practices (GMP) under Schedule M, aligned with World Health Organization standards.
Impending Deadline and Widespread Non-Compliance
With the deadline for the revised Schedule M standards set for 1 January 2026, government deliberations are intensifying. According to two officials familiar with the matter, the Union health ministry will begin consultations with state governments starting Monday. The urgency stems from alarmingly low compliance rates among the country's 8,500 pharma MSMEs, which constitute a majority of India's 10,500 drug manufacturing units.
These MSMEs produce 70% of India's generic drugs but face upgrade costs ranging from ₹10-15 crore per facility. Data reveals a critical gap: out of 8,500 MSMEs, only 2,000 have complied. More concerning is that of the remaining 6,500 firms, a mere 1,400 (21.53%) have submitted upgrade plans to the authorities. Non-compliance risks immediate plant closures, penalties, and criminal prosecution under the new rule-based regime.
Root Causes: Financial Strain and Skill Shortages
Industry representations highlight deep-rooted issues. Many MSMEs, defined as firms with revenue of ₹250 crore or less (though most pharma SMEs are below ₹50 crore), cite financial inability and physical constraints. They lack space for expansion or cannot alter existing plant layouts to meet new flow requirements. The problem is compounded by a severe shortage of skilled personnel needed to manage over 300 new standard operating procedures covering Quality Management Systems, risk management, and waste handling.
"Small firms effectively act as training grounds," said an unnamed SME drug maker, highlighting a retention crisis where upskilled employees migrate to larger firms. Lobby groups like Laghu Udyog Bharati, the Federation of Pharma Entrepreneurs, and the Himachal Drug Manufacturers Association have pleaded for an extension, warning of widespread medicine shortages and unemployment if the deadline is enforced rigidly.
Global Reputation and the Push for Quality
The government's cautious approach balances the need to support small businesses with the imperative to restore India's global reputation as the 'Pharmacy of the World'. This title has been tarnished by incidents linking Indian-made cough syrups to child deaths in Uzbekistan, Gambia, Cameroon, and India. In response, regulators have intensified inspections. Since December 2022, over 960 premises have been inspected, leading to action against 860 firms.
Health experts emphasize that quality is non-negotiable. Dr. Rajeev Jayadevan, a public health expert, stated that stringent standards are a necessity for global trust, drawing parallels to hospitals adopting NABH accreditation. Large pharmaceutical companies and industry bodies like the Indian Pharmaceutical Alliance support the new mandate, stating it is vital for patient safety and global supply chain integration.
The Path Forward: Handholding and Phased Implementation
Stakeholders are seeking pragmatic solutions beyond a simple extension. At a recent Pharmexcil meeting, MSME associations proposed a phased implementation strategy and government-backed "crash courses" to upskill workers. They have requested handholding through institutes like the National Institute of Pharmaceutical Education and Research (NIPER).
The government's Pharmaceuticals Technology Upgradation Scheme, offering up to ₹2 crore for modernization, has seen 192 applications approved. However, the scale of the challenge demands more comprehensive support. As the health ministry deliberates, the decision will critically impact the future of India's $50 billion pharmaceutical sector, which supplies 20% of the world's generic medicines and 60% of its vaccines.
