The Central Bureau of Narcotics (CBN) and the Pharmaceuticals Export Promotion Council of India (PHARMEXCIL) signed a Memorandum of Understanding (MoU) on 24 August 2026 at the CBN Headquarters in Gwalior, Madhya Pradesh. The agreement aims to promote legitimate pharmaceutical exports while preventing the diversion of medicines and chemicals for illicit use. It seeks to balance India’s position as the pharmacy of the world with stronger regulatory oversight over narcotic drugs, psychotropic substances and controlled precursors.
What Does the New MoU Aim to Achieve?
The MoU was exchanged between Dr. Dinesh Bisen, Narcotics Commissioner representing CBN, and Shri Raja Bhanu, Director General of PHARMEXCIL, at the CBN Headquarters in Gwalior. According to the Ministry of Finance, the pact is designed to make legitimate international trade easier while closing gaps that allow pharmaceutical products to be diverted for illegal purposes.
India is a leading global supplier of Active Pharmaceutical Ingredients (APIs), bulk drugs, formulations, biologics and medical devices. Many of these products, or the chemicals used to make them, are closely controlled because they can also be misused to produce narcotic drugs and psychotropic substances. The MoU recognises this dual reality and tries to protect honest exporters without weakening controls.
The framework is described as a strategic extension of the National Roadmap of Ease of Doing Business. It seeks to integrate voluntary compliance into the export system so that trusted exporters face fewer bottlenecks, while supply chains remain secure against misuse. The government has stressed that the approach will not add new statutory or financial burdens beyond existing laws.
Understanding the Two Partners
Central Bureau of Narcotics (CBN)
The Central Bureau of Narcotics (CBN) is a central government department under the Department of Revenue, Ministry of Finance. It administers the facilitation, regulation and enforcement provisions of the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, which came into force on 14 November 1985 to consolidate laws on narcotic drugs, strengthen controls and implement India’s obligations under three United Nations drug conventions.
The CBN supervises the licit cultivation of opium poppy in notified tracts of Madhya Pradesh, Rajasthan and Uttar Pradesh, licenses farmers, measures fields, and procures the entire opium crop through weighment centres. It also issues authorisations for the import and export of narcotic drugs and psychotropic substances and issues No Objection Certificates (NOCs) for controlled precursor chemicals. Its headquarters was shifted from Shimla to Gwalior in 1960, and it was formed through the amalgamation of earlier opium agencies dating back to the British period, with the present Opium Department established in November 1950. The organisation is headed by the Narcotics Commissioner of India, an officer of the Indian Revenue Service (IRS) holding the rank of Joint Secretary, and operates field units at Neemuch, Kota and Lucknow along with preventive and intelligence cells.
Pharmaceuticals Export Promotion Council of India (PHARMEXCIL)
The Pharmaceuticals Export Promotion Council of India (PHARMEXCIL) is the authorised agency of the Government of India for promotion of pharmaceutical exports. It was set up by the Ministry of Commerce and Industry in May 2004 under the Foreign Trade Policy through a notification of the Directorate General of Foreign Trade (DGFT), as a non-profit company under Section 25 of the Companies Act. Its headquarters is at Hyderabad, Telangana, at Aditya Trade Centre, Ameerpet.
PHARMEXCIL covers a wide product range, including APIs, Finished Dosage Forms (FDF), biologics, herbal and Ayurvedic products, diagnostics, surgicals, nutraceuticals, collaborative research, contract manufacturing and regulatory services. Its functions include making policy representations to the government, advising on trade negotiations, issuing Registration cum Membership Certificates (RCMC) and Certificates of Origin, helping members claim Market Access Initiative (MAI) benefits, and organising trade delegations, buyer-seller meets and seminars in India and abroad.
Key Features of the Agreement
The MoU lays out a cooperative framework rather than a new law. Its main elements are voluntary, facilitative and focused on trust building between regulator and industry.
First, a Voluntary Code of Conduct (VCC) will be developed by the government in close consultation with PHARMEXCIL. The code will set out recommended practices for handling sensitive pharmaceutical products and precursor chemicals, including due diligence, customer verification and timely reporting of suspicious orders. It will remain voluntary and non-binding and will not interfere with normal business operations.
Second, the partnership will focus on trade facilitation and ease of doing business. Both sides will identify operational bottlenecks in export procedures and recommend measures to streamline legitimate exports for compliant exporters. This includes reducing dwell time for export authorisations and improving the use of the Unified Web Portal (UWP) of CBN, through which all applications for export and import NOCs have been processed online since 1 October 2023.
Third, the MoU provides for capacity building. CBN and PHARMEXCIL will jointly organise workshops, seminars and awareness campaigns for exporters, in coordination with bodies such as the Central Drugs Standard Control Organisation (CDSCO) and Customs where required. The aim is to spread awareness of legal requirements and vigilance practices across the membership base.
Fourth, it creates a channel for information sharing. Necessary information will be exchanged to meet regulatory objectives, subject to applicable laws and confidentiality. The pharma industry will also endeavour to nominate Contact Persons from member companies to coordinate on matters related to the code. This supports the global concept of public-private partnerships promoted by the International Narcotics Control Board (INCB) to prevent diversion, which supplements the mandatory controls under the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
| Feature | What It Means in Practice |
|---|---|
| Voluntary Code of Conduct | Guidance on customer checks, record keeping and reporting suspicious transactions, without creating new legal liability |
| Trade Facilitation | Review of procedures to speed up NOCs and authorisations for honest exporters |
| Capacity Building | Joint training and outreach with CDSCO and Customs for exporters |
| Information Exchange | Secure sharing of relevant data under law, plus nominated industry contact points |
The signing follows a similar MoU that CBN signed with the Basic Chemicals, Cosmetics and Dyes Export Promotion Council (CHEMEXCIL) on 28 April 2025, and aligns with the Voluntary Code of Conduct for Preventing Diversion of Precursor Chemicals launched nationally by the Narcotics Control Bureau (NCB) in Ahmedabad on 16 June 2026.
Why Balancing Exports and Regulation Matters Now
India is often called the pharmacy of the world. It is the third largest producer of drugs by volume, supplies about 20 percent of global generic medicines, and exports pharmaceutical products to more than 200 countries. More than 60 percent of these exports go to highly regulated markets such as the United States and Europe.
Export performance has grown sharply. Pharma exports rose from $15.44 billion in FY2014 to $30.47 billion in FY2025, an increase of 9.4 percent year on year, with $3.68 billion in March 2025 alone, up 31 percent from the previous March. In June 2026, officials noted total pharma industry turnover of nearly $60 billion, up from about $20 billion in 2014, with a projection of $130 billion by 2030 and an export target of $50 billion by 2030.
This scale makes regulatory credibility critical. Under the NDPS Act, import and export of narcotic drugs and psychotropic substances requires an authorisation from the Narcotics Commissioner and is governed by an estimate system linked to requirements reported to the International Narcotics Control Board (INCB) in Vienna. Exports of controlled precursors listed under the NDPS (Regulation of Controlled Substances) Order, 2013 need an NOC through a Pre-Export Notification (PEN) system that checks the genuineness of the buyer with the competent authority of the importing country. At the same time, the Central Drugs Standard Control Organisation (CDSCO) in 2025 tightened its Export NOC rules for medicines that can be misused as narcotics abroad, requiring two-step verification and, for certain unapproved or banned categories, approval from the importing country’s National Regulatory Authority (NRA).
Past cases show why vigilance is needed. Reports of Indian-made drugs being misused overseas as narcotics and of precursor chemicals being diverted for synthetic drug manufacture have led to sanctions and criminal action against involved firms. Even when only a few consignments are diverted, the damage to India’s reputation as a reliable supplier can affect the entire sector. A voluntary, collaborative model helps compliant companies demonstrate due diligence, keep clearance times short, and reduce the need for heavier statutory controls on non-scheduled chemicals.
The Way Forward
After the signing, both sides held detailed deliberations on a six-month action plan. Priorities include pan-India outreach, stakeholder sensitisation in collaboration with PHARMEXCIL, and defining core areas of institutional and regulatory cooperation. The plan also aims to establish clear implementation steps for the Voluntary Code of Conduct and for nominating industry contact persons.
For exporters, the immediate focus will be on adopting the new code into standard operating procedures, strengthening Know Your Customer (KYC) checks, monitoring input-output ratios, and reporting unusual enquiries such as anonymous internet requests, sudden spikes in order size or requests for unusual shipping routes. For regulators, the goal is to use voluntary sharing of data to detect diversion patterns early while keeping the system light for honest trade.
If implemented well, the MoU can help India move from volume-led to value-led pharma growth while protecting international supply chains. By aligning trade promotion with the controls under the NDPS Act and international obligations, the partnership supports both economic interests and the broader aim of preventing the misuse of medicines and chemicals.
Key Takeaways
- The CBN-PHARMEXCIL MoU was signed on 24 August 2026 at the CBN Headquarters in Gwalior between Narcotics Commissioner Dr. Dinesh Bisen and PHARMEXCIL Director General Shri Raja Bhanu.
- The Central Bureau of Narcotics (CBN) functions under the Department of Revenue, Ministry of Finance and administers the NDPS Act, 1985, with headquarters at Gwalior (shifted from Shimla in 1960).
- PHARMEXCIL was established in May 2004 by the Ministry of Commerce and Industry under the Foreign Trade Policy and is headquartered in Hyderabad.
- The MoU provides for a Voluntary Code of Conduct, trade facilitation through the Unified Web Portal (UWP) operational since 1 October 2023, joint capacity building with CDSCO and Customs, and nomination of Contact Persons from member companies.
- India is the third largest drug producer by volume, supplies about 20 percent of global generic demand, and recorded pharma exports of $30.47 billion in FY2025, with a target of $50 billion by 2030.
