Pharma MSMEs Caught Between Compliance and Competitiveness

India’s pharmaceutical micro, small and medium enterprises (MSMEs) have long been part of the country’s “pharmacy of the world” narrative. Yet, recent changes in export norms are testing their resilience. The introduction of stricter export No-Objection Certificate (NOC) requirements by the Central Drugs Standard Control Organisation (CDSCO) has raised concerns that the very firms powering India’s presence in Africa, Latin America and South Asia could be edged out of these markets.

New Rules, New Pressures

Under the revised framework, exporters must hold valid licenses, submit applications through the online Sugam portal, file an Integrated Registration Form and secure approvals from the importing country’s National Regulatory Authority (NRA) or from a Stringent Regulatory Authority (SRA) such as those in the US, EU or Japan. While CDSCO has promised quicker turnaround times—most NOCs within seven working days—the compliance burden remains steep for small exporters.

For MSMEs operating on thin margins, the additional documentation, certification and regulatory costs are far from trivial. The demand for NRA approvals, especially for countries where no strong regulator exists, effectively blocks access to certain export markets.

Risks on the Horizon

Pharma exporters warn that even modest delays in obtaining NOCs can result in cancelled orders. Products such as vitamins, non-sterile injectables and over-the-counter medicines operate on short lead times, leaving little room for bureaucratic lag. In competitive markets, international buyers may prefer alternatives in Bangladesh, Pakistan or China, where export rules are seen as less cumbersome.

The financial strain adds to the challenge. Smaller firms often lack dedicated compliance teams or the capital needed for GMP upgrades, lab testing and regulatory consultancy. Beyond cost, many are struggling with the institutional capacity to navigate complex processes.

Some Relief, But Not Enough

The July 2025 revisions did introduce certain relaxations. For instance, approvals from SRAs can substitute for NRAs in more cases, and the requirement for purchase-order-specific NOCs has been removed for most drugs except narcotics, psychotropics and banned substances. This reduces paperwork and uncertainty.

Yet, MSMEs say the reforms do not go far enough. The costs of compliance, especially amid deadlines for upgraded GMP standards, remain formidable. Even where SRAs are accepted, documentation and traceability requirements still stretch the resources of small manufacturers.

A Case for Calibrated Policy

The larger concern is not only the survival of small exporters but also India’s credibility as a reliable generics supplier. Once buyers shift supply chains, regaining lost ground is notoriously difficult.

Policy recalibration could make the difference. Restricting NOCs to truly sensitive drugs, creating alternative approval routes, and enforcing strict turnaround timelines would ease the strain. Beyond regulatory streamlining, MSMEs require financial and technical support—from subsidised testing labs to compliance training. A stronger consultative process with MSME stakeholders would also help bridge gaps between intent and impact.

Strategic Stakes

The issue has implications beyond MSMEs. India’s aspiration to expand its pharma exports to $60–65 billion by 2030 hinges not just on big companies but also on the collective strength of its smaller players. A rigid regulatory framework could undercut this ambition, while an enabling environment could unlock new opportunities across generics, APIs and high-value formulations.

Global buyers increasingly value quality and reliability. Balancing those expectations with MSME realities is the policy challenge. If India can align compliance with competitiveness, it can reinforce its position as a trusted global supplier. If not, it risks ceding ground to regional rivals who are quicker to adapt.

The Way Forward

Pharma MSMEs are not calling for a rollback of safeguards but for smarter regulation. Streamlined processes, recognition of international approvals, financial assistance for compliance upgrades and export diversification through trade agreements can together create a framework that protects quality without eroding competitiveness.

The test lies in execution. India has the opportunity to turn regulatory reform into a strategic advantage. Getting it wrong, however, may cost not just orders, but long-term credibility in the global marketplace.