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From Farm To Formulation: Nurturing A Flourishing Nutraceutical Landscape In India

By Sanjaya Mariwala February 21, 2024

Certain sunshine sectors, such as nutraceuticals, have not received as much attention, even though India is the land of Ayurveda and possesses ancestral knowledge of herbs and natural medicines

From Farm To Formulation: Nurturing A Flourishing Nutraceutical Landscape In India
Research and development (R&D) gain prime importance in the country’s roadmap to emerge as a global nutraceutical giant.
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The very product that can be a tonic for the mind, body, and Indian economy—nutraceuticals—can do with an injection of faith and support from the authorities.

India’s spectacular economic growth and growing ambition have placed it on the path of achieving a $30 trillion economy by 2047.

The Indian Government has launched various schemes and incentives, such as the Production-Linked Incentive (PLI) scheme. These have contributed to the growth of many sectors, including healthcare. 

However, certain sunshine sectors, such as nutraceuticals, have not received as much attention, even though India is the land of Ayurveda and possesses ancestral knowledge of herbs and natural medicines. The implementation of policies and initiatives in the industry has remained sluggish. To give just one example, while the pharmaceutical sector only pays 5 percent GST, nutraceutical products bear a burden of over 18 percent GST. 

A Collaborative Approach Needed

A close look at the workings of the nutraceuticals space shows that there is an absence of a well-developed and inter-linked ecosystem spanning the entire value chain, right from farms to formulations. 

The industry needs to recognise the importance of playing an active role in developing farm linkages. The government needs to remove hurdles in this process, such as a tax-motivated interpretation of the Biodiversity Act.

At the farm level, farmers need handholding in terms of financial support and technical know-how to enable innovation and best industry practices. At the other end of the spectrum, industry stakeholders, academia, and researchers need to collaborate to weed out inefficiencies so that the industry realises its full potential. 

Collaboration between academia, industry, and farmers is crucial, as they can help translate traditional knowledge into standardised, clinically validated extracts.

Manufacturers, in turn, can transmute farm produce into potent formulations with the help of advanced technology, while distributors ensure last-mile delivery of these formulations to the remotest parts of the country. 

Research and Development, a Key Component

Research and development (R&D) gain prime importance in the country’s roadmap to emerge as a global nutraceutical giant. India has made substantial strides in R&D, ascending from the 81st rank in 2015 to the 40th rank in 2023 on the Global Innovation Index, which ranks 132 economies on various parameters. But a lot still needs to be done. 

Interestingly, the country has reported a spurt in its patent filings in 2022, which underpins the nation's growing innovation capabilities. The government has been supportive in this regard, and initiatives such as the Nutraceutical Task Force are a case in point.

However, though the policy framework has been conducive so far, the country's yawning gap in R&D expenditure hinders the goal towards the set global benchmark. This is also aggravated by the private sector's conservative approach towards nutraceuticals and calls for action, most importantly the need for greater investment towards research. 

Policy Thrust, a Must

The nutraceuticals industry is integral to India's 'China Plus One' strategy, which aims at reducing dependence on China. The government and industry are aiming for a $100 billion market for nutraceuticals by 2030. To achieve this, instituting distinct HSN codes for nutraceutical products, entrusting the industry under a specific ministry, clarity on interpretation of or re-evaluating the Biodiversity Act, and implementing a tailored PLI scheme are critical steps.

The Way Forward

Given the growth potential of the nutraceutical industry on the domestic and international fronts, India needs to up its game in order to establish itself as a global nutraceuticals centre. Inadequate infrastructure, complex regulations, financial impediments are some challenges that are likely to hamper progress and thwart innovation in the industry.

Additionally, gaps in the Biodiversity Act and its one-sided interpretations might need a review to spur innovation. The need of the hour is to ensure a positive regulatory environment with simplified frameworks and streamlined approval processes as well as self-regulation through industry bodies, all of which can go a long way in staving off redundancies across the system to make way for innovation and higher growth. 

Through concerted efforts and collaboration between industry stakeholders and government bodies, the domestic nutraceuticals industry can overcome the obstacles it confronts in the present times and emerge as a leading industry to propel India to a higher economic growth trajectory and reinstate its position as a healthcare hub of the world. 

(Sanjaya Mariwala is the Executive Chairman and Managing Director at OmniActive Health Technologies and President of Association of Herbal and Nutraceutical Manufacturers of India.)

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