The central government is considering a one-year extension for thousands of small pharmaceutical manufacturers who are struggling to comply with the new quality standards. The discussion comes as the revised Schedule M norms are set to take effect from January 1, 2026.

Senior officials say the move is meant to ensure an uninterrupted medicine supply and to prevent small drug manufacturing units, which play a key role in India’s generic drug industry, from being forced to shut down.

Low MSME Compliance Prompts Government Review

The revised Schedule M guidelines align India’s drug manufacturing standards with those of the World Health Organization. While the intention is to boost quality and global dependence, compliance levels among small and medium pharmaceutical firms remain low. As per the officials, less than one-third of eligible MSME drug manufacturers have submitted their upgrade plans so far. This has raised serious concerns within the government. 

If the rules are enforced strictly without relief, many units could face penalties or closures.

India has around 10,500 drug manufacturing units. Nearly 8,500 of them fall under the MSME category, with annual revenues of Rs 250 crore or less. These units produce about 70 percent of the country’s generic medicines.

High Upgrade Costs and Structural Limits Cited by MSMEs

For most MSME drug makers, upgrading facilities to meet the new standards is not a simple task. Each unit is estimated to need an investment of Rs 10 to Rs 15 crore. So far, around 2,000 MSME units have managed to comply fully.

Officials say many firms are willing to upgrade but face space constraints. Older plants lack room for expansion. Layout changes needed to meet workflow norms remain a major hurdle, especially in dense industrial zones.

Structural changes, not equipment, are proving to be the biggest challenge.

States Begin Inspections as Schedule M Deadline Nears

The health ministry is set to begin consultations with state governments on the proposed extension. Risk-based inspections are expected to commence on January 1, 2026, across all states and Union Territories. Some states, including Himachal Pradesh and Uttarakhand, have already begun inspections, adding urgency to the review process.

Officials said discussions are ongoing and any decision will balance public health goals with ground-level realities.

The proposed extension could give MSME pharma units time to adapt without disrupting medicine supply. At the same time, it underlines the government’s push for stronger quality standards across India’s drug manufacturing sector.