India’s revised Schedule M regulations are gradually reshaping the country’s pharmaceutical manufacturing ecosystem. Industry officials caution that while the reforms are expected to improve quality standards and global credibility, they could also lead to consolidation among thousands of small- and medium-sized drug manufacturers that may find it challenging to comply with the new requirements.
The common concern across the industry is that compliance is no longer limited to installing new equipment or upgrading facilities. It now requires sustained investment in quality systems, documentation, data integrity, skilled manpower, and continuous audits, significantly increasing the cost of doing business.
Latest estimates by industry body Pharmexcil suggest that only 25-40% of India's nearly 8,500 small and medium pharmaceutical manufacturing units are currently fully compliant or near-compliant with the revised Schedule M requirements.
The revised Schedule M refers to India’s updated Good Manufacturing Practices (GMP) guidelines for pharmaceutical products, notified by the Ministry of Health and Family Welfare in December 2023 and effective from December 2025.
The updated norms seek to align domestic manufacturing standards more closely with global benchmarks by strengthening quality management systems, documentation, equipment validation, sanitation controls, complaint handling, product recalls, and data integrity practices. The move is aimed at enhancing the quality and safety of medicines produced in India while improving the nation’s regulatory credibility in both local and export markets.
As pharmaceutical MSMEs race to meet the revised Schedule M requirements, industry executives who spoke to The Economic Times Digital say the transition is likely to reshape the sector’s operating landscape.
Akshansh Chaudhary, Executive Director and Chief Technical Officer at Panchkula-based Venus Remedies, says the revised Schedule M requirements will lead to a structural shift in the way pharmaceutical MSMEs operate. “The capex required for MSMEs to comply with the revised Schedule M norms is substantial and varies based on their current level of preparedness. Recent industry estimates suggest that a typical unit would need Rs 10-15 crore per facility for comprehensive upgrades, including cleanroom infrastructure, automation, and robust quality systems,” Chaudhary says.
Government support schemes are helping, but pharma players say the assistance currently available covers only a fraction of the investment required for full compliance.
While some smaller units may attempt limited upgrades, many risk falling short of sustainable compliance, says Chaudhary. “Overall, Schedule M represents a structural shift, pushing MSMEs toward globally aligned, quality-driven manufacturing rather than incremental compliance.”
Compliance comes at a cost
Industry players believe the challenge extends beyond plant upgrades.
Saurabh Agrawal, Director at Hab Pharma, says companies already operating close to global Good Manufacturing Practice (GMP) standards have had a relatively smoother transition. “Preparedness has been a continuous process over several years. For companies already aligned with global GMP expectations, revised Schedule M is more of an evolution than a starting point. We consider ourselves largely ready on the ground,” Agrawal says.
According to him, the biggest changes have been process-driven rather than infrastructure-led. He says that major investments have focused on strengthening quality management systems, data integrity frameworks, documentation processes, audit trails and validation systems. “We are more than 95% aligned, having worked towards this over multiple years,” he says, adding that compliance spending has become a significant line item in corporate budgets.
“Across firms, compliance-related capex has been elevated and is approximately 4% of annual revenue over the last few years, which is a meaningful allocation for a manufacturing business,” he says.
Talent crunch adds to the burden
If capital expenditure is one challenge, finding qualified talent is proving to be another for several pharma MSMEs across the country. According to Chaudhary, workforce capability remains one of the weakest links for many MSMEs attempting to upgrade operations. “Certainly, the challenges for MSMEs extend well beyond capital investment. The most critical gaps lie in workforce capability and quality culture, where building a GMP-driven mindset and ensuring continuous training remains a hurdle,” he says.
The issue is particularly acute in quality assurance, quality control, and regulatory affairs functions. Industry estimates, cited by Venus Remedies, suggest an overall talent deficit of around 35% in the pharmaceutical sector, while nearly 67% of companies report shortages in specialised compliance-related roles.
“The shortage is especially acute in QA/QC (Quality Assurance/Quality Control) and GMP roles, where demand for skilled professionals significantly outpaces supply,” Chaudhary says.
Hab Pharma’s Agrawal flags similar concerns. He points out ‘talent availability’ as the biggest challenge. “Hiring experienced QA, validation, and compliance professionals has become difficult and time-consuming,” he says.
Other exporters also share the same concerns. Namit Joshi, Chairman of the industry body Pharmexcil, says MSME pharmaceutical exporters are disproportionately affected by tightening regulatory requirements because they often lack the resources and operational agility available to larger manufacturers.
“MSME pharma exporters are disproportionately impacted by stricter global norms. MSMEs often struggle with limited resources and operational agility, making it challenging to keep up with the evolving regulatory landscape,” Joshi says.
According to Agrawal, revised Schedule M norms have increased quality-related manpower requirements by 20-30%, adding to recurring operational costs for manufacturers. “This has led to a 20-30% increase in QA/QC and documentation manpower requirements, continuous validation cycles, and increased audit frequency,” he says.
Consolidation fear looms large
The growing compliance burden is also raising concerns about the future of smaller manufacturers. Industry officials believe the next few years could witness a combination of shutdowns, acquisitions, and capacity rationalisation as enforcement becomes stricter. According to Venus Remedies’ Chaudhary, more than 60% of pharmaceutical MSMEs remain vulnerable because of compliance gaps and funding constraints.
“With over 60% of units at risk due to non-compliance and financial constraints, we expect a mix of shutdowns, strategic acquisitions, and capacity rationalisation as regulatory enforcement tightens,” he says.
Chaudhary emphasises that stronger and compliant manufacturers are likely to acquire stressed assets, adding that regulatory enforcement could accelerate consolidation across pharmaceutical manufacturing clusters.
Hab Pharma’s Agrawal sees a similar trend emerging. “Yes, there is a real risk. For smaller manufacturers, compliance costs as a percentage of revenue are substantial, and without scale, it becomes difficult to sustain operations. This may lead to industry consolidation over time,” he says.
Pharma players argue that the transition could favour mid-sized companies that have already invested in quality systems and scalable infrastructure.
Joshi adds that many MSME exporters are also grappling with the increasing complexity of regulatory requirements, which have steadily increased compliance costs over the last few years. According to him, investments in traceability systems, documentation, quality assurance, and GMP compliance have become unavoidable as both domestic and overseas regulators raise scrutiny levels. As a result, many MSMEs continue to face delays in securing financing for upgrades.
The challenge becomes more pronounced because compliance is not a one-time expenditure. Companies must continue investing in audits, training, validation activities, and quality systems long after facility upgrades are completed.
Industry players anticipate that risk-based inspections will gather pace after the compliance deadline, putting additional pressure on manufacturers who are lagging. While government timelines have already been extended once, Chaudhary believes regulators are likely to adopt a calibrated approach rather than announcing blanket extensions.
“The timelines for revised Schedule M compliance have already seen meaningful extensions, but they remain ambitious for a large section of MSMEs," he says.
Industry officials maintain that despite the near-term disruption, stronger compliance standards are essential for India's pharmaceutical sector. Chaudhary believes that stronger compliance would improve regulatory credibility, reduce quality risks and create opportunities in more regulated markets over the long run.
Agrawal also views the transition as necessary for maintaining India's standing in global pharmaceutical markets. “India’s position as the ‘Pharmacy of the World’ depends on consistent quality, compliance, and global credibility, and strengthening Schedule M is a critical step in that direction,” he says.
