Government considering to tighten the regulatory noose around pharmaceutical imports from China. Government planning stricter scrutiny of active pharmaceutical ingredients (APIs), key starting materials (KSMs) for medicines and medical equipment. The comes in the wake of the military face-off between India and China in east Ladakh and the continuing diplomatic tension. Government is exploring all options to reduce import dependence on China. The domestic API manufacturing industry, mostly based out of Hyderabad and Ahmedabad, currently accounts for 8-10% of India’s over Rs 1.33 lakh crore pharmaceutical market. The rest comprises formulations. Now, Indian drug makers are also exploring options in EU markets to source APIs and other raw materials. India is likely to source more APIs from Germany, Sweden and Italy, even as it also ramps up local production. At present, 30-35% of API imports are from these countries, while China caters to the rest. However, India may have to deal with cost pressures as China supplies products at 25-30% cheaper than other markets.