In a significant move, the  Central Drugs Standard Control Organization (CDSCO)under the Ministry of Health and Family Welfare recently released a draft notification proposing an extension for small and medium pharmaceutical firms to comply with the updated Schedule M of the Drugs and Cosmetics Act of 1940. This comes after extensive industry appeals, citing financial and operational obstacles in fulfilling the initial deadline. The updated Schedule M intends to raise India's Good Manufacturing Practices (GMP) to worldwide standards, ensuring medicine quality and strengthening the country's reputation as a leading pharmaceutical exporter. While the extension provides immediate respite to manufacturers, it raises serious concerns about the long-term ramifications for the Indian pharmaceutical industry.

The draft notification allows small and medium-sized manufacturers with annual revenues of up to Rs. 250 crore to apply for an extension of the compliance deadline until December 31, 2025. To be eligible, manufacturers must submit a complete gap analysis and implementation plan within three months. The Central Drug Standard Control Organisation (CDSCO) will conduct audits every three months to check progress and ensure compliance with the proposed upgrade plans. Units that fail to demonstrate visible progress may face disciplinary sanctions. According to the Ministry, India has around 10,500 pharmaceutical manufacturing facilities, with 8,500 falling into the Micro, Small, and Medium Enterprises (MSME) category. Only 2,000 of these units are currently WHO GMP-certified. Thus, the new criteria are critical to enhancing overall drug production quality and ensuring the global acceptance of Indian pharmaceuticals.

Despite the one-year extension, industry stakeholders are concerned about the possibility of meeting compliance deadlines. Financial limits, staffing shortages, operational disruptions, and classification problems are among the key challenges identified by stakeholders. Upgrading manufacturing facilities to meet the updated GMP standards necessitates substantial investments in infrastructure, equipment, and experienced labour. Many micro and small businesses, with turnovers as low as Rs. 3–5 crore, lack the financial resources to carry out such major renovations without government assistance. Another major issue is the availability of appropriately skilled technical workers. According to Jagdeep Singh, President of the Punjab Drug Manufacturers Association (PDMA), many graduates lack fundamental pharmaceutical expertise, making it difficult for units to swiftly develop a qualified workforce. Implementing the necessary adjustments without pausing production is a logistical problem, since any large disruption in production could disrupt supply chains, especially in the domestic market, where many MSMEs play an important role in delivering affordable pharmaceuticals. Industry associations say that lumping all companies with turnovers under Rs. 250 crore into a single category ignores the capacity differences between micro units and larger MSMEs. Micro units require more time and targeted support than their larger counterparts.

According to media sources, Dr. Rajesh Gupta, All-India Head of Laghu Udyog Bharati, hailed the extension, stating that it provides much-needed relief to MSMEs. However, he asked the government to address specific compliance issues confronting smaller units. Similarly, the SME Pharma Industries Confederation (SPIC) has advocated for a five to ten-year transition time, saying that a hurried adoption could result in the closure of thousands of MSME units. SPIC has also advocated for government-sponsored financial help and training initiatives to make compliance easier.

The successful implementation of the amended Schedule M will increase the credibility of Indian pharmaceutical products in overseas markets. With many low- and middle-income countries (LMICs) reliant on Indian generic pharmaceuticals, enhanced GMP compliance may increase export potential. Larger firms may close or absorb smaller units struggling to meet compliance requirements, leading to increased market concentration. While this could improve overall industry efficiency, it may also diminish competition and affect medicine affordability. The desire for higher production standards may encourage innovation and adoption of innovative technology in the business. However, without enough government backing, smaller businesses may struggle to stay up, reducing the industry's overall potential for equitable growth.

The extension of the compliance deadline is a positive step that demonstrates the government's understanding of the issues that MSMEs face. However, considering the scope of the undertaking, a more thorough strategy is required. This includes giving financial support, technical training, and even a graded compliance framework that takes into consideration the various capacities of micro, small, and medium-sized businesses. India's pharmaceutical sector is at a crossroads. While the amended Schedule M provides an opportunity to harmonise with global norms and elevate the country's status as a pharmaceutical powerhouse, it also creates major obstacles for smaller firms. A balanced policy that encourages MSMEs while maintaining tight quality control is critical to sustaining industry growth and protecting public health.