India Ratings and Research (Ind-Ra) in its latest report has said that India's active pharmaceutical ingredient (API) segment is likely to witness price recovery in FY27. This outlook is supported by the implementation of minimum import price (MIP) starting from January 29, 2026 and China’s withdrawal value-added tax (VAT) rebate from April 1, 2026. Ind-Ra said this should curb discount-led imports and stabilise domestic realisations.

According to the report, API prices are likely to be impacted in the near term, due to volatility in crude prices and currency exchange rate due to the geopolitical situation prevailing in the Middle East. However, volumes are expected to strengthen with the easing destocking and an improving demand from the US and the European Union, aided by a favourable shift toward high-value contract development and manufacturing organisation (CDMO) and complex APIs.

India Ratings and Research further noted that the margins should strengthen on a higher utilisation and firmer pricing, with VAT-linked input cost increases remaining gradual enough to support cash flow and working capital normalisation.