Budget 2026 Set to Strengthen India's Drug Regulatory Framework
The Indian government is preparing to inject fresh resources into the country's pharmaceutical oversight system. According to three government officials familiar with the discussions, the upcoming Union Budget for FY27 will likely announce significant measures. These include establishing new drug testing laboratories and boosting regulatory manpower across the nation.
Addressing Global Scrutiny and Domestic Needs
This move comes at a critical time. India's pharmaceutical exports, valued at approximately $60 billion, face increased international scrutiny. The industry supplies nearly one-fifth of the world's generic medicines. Recent quality issues have prompted urgent calls for a more robust regulatory system.
State governments and Union territories have sent numerous representations to the Centre. They highlight the pressing need for stronger drug regulation. In response, the Union Health and Family Welfare Ministry is finalizing a comprehensive plan. This plan focuses on upgrading existing infrastructure and expanding the technical workforce.
The Current State of Drug Testing and Regulation
India's current drug testing infrastructure consists of several key components:
- Seven Central Drug Testing Laboratories (CDTLs): Located in Kolkata, Chennai, Mumbai, Chandigarh, Hyderabad, Guwahati, and Kasauli.
- 35 State Government Laboratories: These facilities work to ensure quality control for drugs and cosmetics nationwide.
- 2,283 Drug Inspectors: This total includes 400 personnel working for the Central Drugs Standard Control Organisation (CDSCO), India's apex drug regulator.
However, significant gaps remain. As of December 16, 2025, the country had 249 vacant drug inspector posts. Testing data from FY25 reveals ongoing challenges. Regulators tested a total of 116,323 drug samples. Of these, 3,104 were declared 'not of standard quality' (NSQ). Another 245 samples were found to be spurious or adulterated.
Building on Existing Schemes: SSDRS 2.0
The government currently operates the Strengthening of States' Drug Regulatory System (SSDRS) scheme. This initiative has an allocation of ₹850 crore. It aims to upgrade laboratories, set up new testing facilities, and modernize drug control offices. Funding follows a 60:40 cost-sharing ratio between the Centre and states.
The new budget plan involves extending this scheme for another five years, until FY31. Officials refer to this proposed extension as 'Version 2.0'. One government official emphasized a critical requirement for success. "A critical gap in the system is manpower sustainability," the official stated. "For new labs to be effective, states must commit to permanent staffing, rather than relying on temporary contracts. This ensures technical expertise remains within the regulatory system."
The Urgency Driven by Recent Tragedies
Several high-profile incidents have underscored the need for stronger oversight. Over the past few years, Indian-manufactured cough syrups have been linked to over 140 deaths globally. Countries like Gambia, Uzbekistan, and Cameroon reported fatalities due to ethylene glycol poisoning.
Domestically, the 'Coldrif' syrup tragedy in late 2025 led to at least 24 deaths. Indian-made eye drops have also been associated with adverse reactions in the United States. Routine sampling within India continues to flag sub-standard batches. A recent case involved a massive crackdown on the paediatric cough syrup 'Almont-Kid'. State regulators found life-threatening contaminants, including ethylene glycol at nearly 15 times the permissible safety limit.
A second government official connected these events directly to the budget initiative. "These incidents have underscored the urgent need for more frequent inspections and a robust laboratory network," the official said. "We must detect contaminants like diethylene glycol before products reach the market. This ensures Indian exports meet the stringent safety benchmarks of global regulators."
Expert Opinions on the Proposed Upgrades
Health experts widely support strengthening India's drug testing and regulatory capacity. They cite both public health protection and the preservation of India's global pharmaceutical reputation as key reasons.
Dr. K. Srinath Reddy, former president of the Public Health Foundation of India (PHFI), offered a stark warning. "Suboptimal testing capacity and defective licensing processes in any state can permit countrywide dissemination and even the export of poor quality and potentially harmful drugs," he said. "We should not permit weak links to exist in our regulatory framework."
Dr. Reddy also suggested a broader approach. "While the government funds new public sector labs, it should also mobilize and enhance underutilized testing capacity in medical colleges, universities, and research laboratories to build a larger network."
Dr. Aashish Chaudhry, Managing Director of Aakash Healthcare in Delhi, emphasized the importance of these upgrades for patient safety. "A robust laboratory network is critical for maintaining accountability across the pharmaceutical value chain," he stated. "Increased testing and enforcement will create benchmarks—from manufacturing to marketing—preventing the use of adulterated ingredients."
Dr. Chaudhry also advocated for technological integration. He suggested using technology in inspections to make the regulatory system "more transparent and harder to manipulate compared to purely manual oversight." Furthermore, he called for expanded accountability. "Marketing firms should be held legally responsible for the products they sell, even if manufactured by third parties," he added.
The Path Forward and Budgetary Process
The final budgetary allocations are still under determination. A third government official outlined the goal. "The initiative aims to enhance capabilities and ensure more rigorous monitoring of pharmaceutical quality nationwide," the official said.
The government will make its final decision on budget allocations closer to the presentation date. It will consider revenue and economic growth forecasts, along with potential savings in revenue spending. The Union Budget for FY27 is scheduled for presentation on February 1, 2026.
Queries sent to the spokespersons of the Health and Finance Ministries on January 7, 2026, remained unanswered at the time of reporting. The upcoming budget announcement is now highly anticipated by the pharmaceutical industry, regulators, and public health advocates alike.
