On February 13, 2025, Indian Prime Minister Narendra Modi and United States President Donald Trump met at the White House. Prime Minister Modi was on an official working visit to the United States. A seven-page-long joint statement followed. It covered a range of issue areas for cooperation: defense, trade and investment, energy security, technology and innovation, multilateral cooperation, and people-to-people cooperation. Importantly, the “leaders announced the launch of the U.S.-India TRUST (Transforming the Relationship Utilizing Strategic Technology) initiative.”
This essay takes stock of the early momentum generated by the joint leaders’ commitment to catalyze public and private investments in building Indian manufacturing capacity—both domestically and in the United States—for active pharmaceutical ingredients (APIs) for critical medicines.
Given the strategic importance of pharmaceutical supply chains to the national security of both India and the United States, and their shared reliance on China for APIs and key starting materials, there is a compelling reason to deepen bilateral cooperation in the pharmaceutical sector. With India as the world’s third-largest producer of medicines by volume and the United States as its largest healthcare market, aligning interests to build a resilient, diversified API ecosystem is both urgent and mutually beneficial.
To discuss this, Carnegie India held a U.S.-India Track 1.5 dialogue during the 9th Global Technology Summit, co-hosted with the Ministry of External Affairs. The discussion brought together stakeholders from government, industry, philanthropic institutions, and the policy community to explore actionable pathways for long-term collaboration on building API supply chain resilience between the two nations.
· Leverage Existing Infrastructure: Rather than duplicating manufacturing infrastructure in the United States, both countries should build on existing facilities and prioritize commercially viable strategies. Relocating API production to the United States would be time-intensive, drive up costs, and require government support through incentives such as subsidized land and talent development. In contrast, India offers a more cost-effective alternative, with established GMP (good manufacturing practices)- and FDA (U.S. Food and Drug Administration)-compliant manufacturing plants, affordable land, and a skilled workforce. In cases where manufacturing needs to relocate to the United States, the two countries should evaluate their complementary strengths and jointly select two or three priority products to begin production at existing pharmaceutical facilities in the United States. This pilot approach would help both governments identify the types of support needed for scaling future collaborations. Indian investments in U.S. manufacturing facilities should be strategically aimed at catering not just to the American market, but also to global demand.
· Establish Clarity on Demand and Create Market Certainty: A demand estimation exercise led by governments, trusted third parties, or consultants is critical to guide Indian production toward the needs of the United States. To de-risk industry investments, both countries should explore advanced market commitments to provide a guaranteed market for manufactured products. This can either be done through government procurement, stockpile arrangements, offtake agreements where a U.S. firm agrees to purchase select APIs from an Indian manufacturer to assure companies, or a pharma-sector equivalent of the U.S.-India Security of Supply Arrangement (SOSA) to ensure supply continuity amid global disruptions.
· Build Enabling Infrastructure for API Collaboration: For meaningful India-U.S. research collaboration, it is essential to develop integrated industrial clusters with complete infrastructure—from raw material sourcing to utilities and logistics—to enable large-scale production. Parallelly, a robust research and policy ecosystem must be built by facilitating the presence of U.S. universities in India, promoting student mobility, and strengthening partnerships between academia and industry. Government support will play a vital role—subsidized access to land, utilities, and streamlined policies will ensure the timely market entry of products. Additionally, simplifying the environmental approval processes in both countries is critical. Together, these measures can serve as foundational infrastructure for a resilient India-U.S. pharmaceutical partnership, positioning them as a credible and competitive alternative to China.
· Mobilize Funding to Compete With Predatory Pricing: As India and the U.S. work toward building robust, secure, and high-quality pharmaceutical supply chains, one of the biggest challenges remains the artificially low pricing from China. To address this, both nations should consider trade safeguards, minimum price mechanisms, or joint subsidy models to level the playing field. Innovative funding approaches, such as encouraging large equity funds to invest in India’s pharmaceutical sector, can help offset the initial cost disadvantages incurred while setting up alternative supply chains. Additionally, public-private partnerships should be explored to enhance the co-development of technology and the collaborative manufacturing of products.
· Harmonize Regulatory Frameworks: Regulatory misalignment remains one of the key barriers to deeper India-U.S. collaboration in API manufacturing. To enable smoother cooperation, both countries must work toward aligning their regulatory systems, policies, and approval processes. India can take steps to encourage more clinical trials through ethical review boards that offer expedited approvals. Additionally, the current three-tiered drug approval process—covering marketing, authorization, and import registration—should be restructured to run in parallel, rather than sequentially, to reduce delays. India should also seek permanent membership in the International Council for Harmonisation (ICH) to promote regulatory convergence and ensure the seamless movement of pharmaceuticals between the two nations.
As the TRUST initiative progresses and as India and the United States seek to secure pharmaceutical supply chains, efforts must focus on leveraging existing capabilities, aligning regulatory systems, and creating investment-friendly ecosystems. Instead of duplicating manufacturing infrastructure in the U.S., both countries should either build on India’s cost-effective, FDA-compliant API manufacturing strengths or identify strategic points along the API supply chain where U.S. capabilities can enhance resilience and efficiency. A coordinated approach to demand forecasting and market assurance—through off-take agreements or advanced market commitments—will incentivize sustained supply. Robust academic and industrial R&D collaboration, aided by university partnerships and streamlined regulatory frameworks, will drive innovation. India’s regulatory architecture must be modernized for global alignment, including faster clearances and streamlined processes. Finally, collaboration must move beyond APIs to strategically important therapeutic areas like oncology, peptides, diabetes, medical devices such as inhalers, and complex generics.
