In a strategic move that signals India’s evolving position in the global pharmaceutical value chain, Telangana Chief Minister A Revanth Reddy unveiled the state’s Next-Gen Life Sciences Policy 2026-30 at the World Economic Forum in Davos. Far from being a routine policy update, the framework represents a fundamental reimagining of how a regional economy can position itself at the cutting edge of biotechnology and advanced therapeutics.
The announcement comes at a pivotal moment for the global life sciences industry, as the sector undergoes a tectonic shift from traditional small-molecule chemistry toward complex biologics, personalized medicine, and breakthrough modalities that were science fiction a decade ago.
A Bold Economic Gambit
The policy’s headline figures are ambitious by any measure: USD 25 billion in new investments over five years, approximately INR 2 lakh crore, with a stated goal of more than tripling the sector’s value from $80 billion to $250 billion by 2030. Equally significant is the employment projection—500,000 high-quality jobs in an industry known for demanding specialized skills and offering premium compensation.
These targets reflect what industry insiders are calling the “Hyderabad Advantage”—the state’s existing infrastructure anchored by Genome Valley, one of Asia’s premier life sciences clusters, and the expanding Medical Devices Park. With over 800 pharmaceutical and life sciences companies already operational, Telangana accounts for approximately 40% of India’s bulk drug production and nearly half of the nation’s vaccine manufacturing capacity.
The policy assumes that this established ecosystem, combined with aggressive new incentives, will create a gravitational pull strong enough to attract not just incremental expansion but transformative investments from global pharmaceutical majors seeking to diversify supply chains in an increasingly multipolar world.
From Generics to Next-Generation Modalities
What distinguishes the 2026-30 framework from its predecessors is its explicit strategic pivot away from traditional pharmaceutical manufacturing. While previous Telangana policies heavily incentivized small-molecule generics and bulk drug production—the bread and butter of India’s pharmaceutical success story—the new policy dramatically reorients state support toward advanced therapeutic modalities.
The policy creates dedicated fiscal and regulatory pathways for three frontier areas: Cell and Gene Therapy (CGT), mRNA therapeutics, and precision fermentation. This represents a state-level recognition of a fundamental industry truth: the future of pharmaceutical innovation lies in biologics and personalized medicine rather than traditional synthetic chemistry.
Cell and gene therapies, which involve modifying a patient’s own cells to treat diseases ranging from cancer to inherited disorders, represent perhaps the most revolutionary development in modern medicine. However, they require entirely different manufacturing infrastructure—clean rooms with specialized bioreactors, cold chain logistics capable of maintaining ultra-low temperatures, and quality control systems far more sophisticated than those used for conventional drugs.
The mRNA platform, thrust into global consciousness by COVID-19 vaccines, has proven its potential to rapidly address emerging diseases while opening new frontiers in cancer treatment and rare genetic disorders. Precision fermentation, meanwhile, represents the convergence of biotechnology and sustainable manufacturing, using engineered microorganisms to produce complex molecules more efficiently than traditional chemical synthesis.
By prioritizing these modalities, Telangana is making a calculated bet that India’s next pharmaceutical advantage will come not from cost-competitive manufacturing of off-patent molecules, but from early positioning in technologies that will define 21st-century medicine. This strategy also addresses a critical vulnerability: as automation reduces the cost advantage of labor-intensive generic drug production, states must climb the value chain or risk irrelevance.
Green Pharma City & the Village Model
Perhaps the most innovative aspect of the policy is its radical approach to industrial geography. The government has proposed the creation of “Green Pharma City” alongside ten decentralized “Pharma Villages,” each spanning 1,000 to 3,000 acres, strategically positioned along Hyderabad’s Outer Ring Road.
This infrastructure decentralization addresses two pressing challenges that have emerged from Telangana’s pharmaceutical success. First, existing industrial clusters, particularly around Balanagar and other parts of Hyderabad, have reached environmental saturation. Air and water quality concerns, alongside local community resistance, have increasingly constrained expansion. The pharmaceutical industry, despite its economic contributions, remains a significant source of industrial pollution, particularly from active pharmaceutical ingredient (API) manufacturing.
The “Green Pharma City” concept explicitly integrates environmental sustainability into industrial planning from inception. While details remain to be fully elaborated, the framework suggests zero-liquid discharge systems, renewable energy integration, and circular economy principles—treating waste streams from one facility as feedstock for another.
Second, the village model distributes economic development beyond the Hyderabad metropolitan area into the state’s hinterlands. Each pharma village is conceived as an integrated ecosystem, combining manufacturing facilities, research laboratories, quality control centers, logistics hubs, and residential areas for workers. This approach aims to create self-sustaining economic nodes that can attract talent while alleviating the infrastructure strain on Hyderabad itself.
The Outer Ring Road location is strategically calculated. The ORR provides excellent connectivity to the Rajiv Gandhi International Airport—critical for an industry dependent on global supply chains and the movement of temperature-sensitive biological materials. Simultaneously, these locations offer abundant land at lower acquisition costs than within the city, while remaining close enough to leverage Hyderabad’s talent pool and service infrastructure.
This decentralized model also creates redundancy and resilience—a lesson learned from pandemic-era supply chain disruptions. Rather than concentrating production in a single vulnerable cluster, distributed facilities can maintain operations even if one node faces disruption.
R&D as Industry
In what may prove the policy’s most consequential innovation, Telangana has reclassified Research and Development units as industrial enterprises. This seemingly technical regulatory reform carries profound implications.
Traditionally, Indian industrial policy has privileged manufacturing over research. Tax incentives, subsidized industrial land, concessional power tariffs, and streamlined approvals were reserved for facilities that produced tangible goods. R&D centres, despite their economic value, occupied a regulatory grey zone—neither pure services nor manufacturing.
By granting R&D units full industrial status, the policy allows standalone research facilities to access the complete suite of benefits: subsidized power crucial for energy-intensive laboratory operations, prime land allotment in industrial parks, and fiscal incentives including the policy’s flagship 100% State GST reimbursement for five years post-commercial operation.
This reform directly targets a specific strategic opportunity: attracting Global Capability Centres (GCCs) from multinational pharmaceutical corporations. As drug development costs spiral—currently averaging $2.6 billion per approved new molecular entity—pharmaceutical giants are unbundling their R&D operations, establishing specialized centres in locations offering the optimal combination of scientific talent and cost efficiency.
India already hosts over 1,600 GCCs across all sectors, employing more than 1.5 million people. However, pharmaceutical R&D centres remain underrepresented, with most activity concentrated in IT services, engineering, and business process functions. Telangana’s policy aims to position Hyderabad as the “R&D Back Office” of global pharma, hosting the discovery research, preclinical development, clinical trial design, and regulatory affairs functions for drugs that will be sold worldwide.
The implications extend beyond direct employment. Pharmaceutical R&D centres create demand for contract research organizations, specialized equipment suppliers, animal facilities, clinical trial sites, and regulatory consultancies—an entire services ecosystem with high-value jobs. Moreover, they serve as talent magnets, attracting PhD scientists, medicinal chemists, and computational biologists who might otherwise migrate abroad.
Critically, treating R&D as industry also signals that innovation itself is economically valuable, even when divorced from immediate manufacturing. A research centre that develops a drug candidate subsequently manufactured elsewhere still generates intellectual property, royalties, patents, and scientific expertise that elevate the regional economy.
Fiscal Architecture
The policy’s fiscal centrepiece—100% State Goods and Services Tax reimbursement for five years following commercial production commencement—represents significant revenue sacrifice in exchange for long-term economic transformation.
Unlike corporate tax incentives, which states cannot independently offer under India’s federal structure, SGST reimbursement falls within state jurisdiction. The five-year timeline aligns with typical pharmaceutical project cycles: two to three years for facility construction and regulatory approval, followed by commercial ramp-up. By the time reimbursement expires, facilities should achieve stable operations and profitability.
This incentive particularly benefits capital-intensive projects—precisely the advanced modality facilities the policy targets. A cell therapy manufacturing plant or mRNA production facility requires hundreds of millions of dollars in specialized equipment. The SGST reimbursement improves project economics during the critical early years when capital costs are being amortized but revenues remain uncertain.
The policy also includes additional fiscal measures, though less prominently featured: stamp duty exemptions for land transactions, electricity duty waivers, and accelerated depreciation provisions. Collectively, these reduce the effective tax burden on new projects by an estimated 25-30% over the first seven years.
Competing in a Crowded Field
Telangana’s aggressive positioning comes against intense competition. Neighbouring Karnataka, anchored by Bangalore’s biotechnology cluster, offers similar incentives and hosts India’s highest concentration of biotech startups. Gujarat has leveraged its chemical industry base to build formidable pharmaceutical manufacturing capacity. Maharashtra, home to Mumbai and Pune, provides proximity to financial markets and established pharmaceutical majors.
Nationally, the Central Government’s Production-Linked Incentive (PLI) scheme for pharmaceuticals, launched in 2020 with INR 15,000 crore in funding, has intensified interstate competition. States are essentially competing to host projects that will receive federal subsidies, creating a race to offer the most attractive complementary state-level benefits.
Globally, Telangana faces competition from established life sciences hubs—Boston, San Francisco, Singapore, and increasingly, Shanghai and Seoul—that offer deeper capital markets, more mature regulatory environments, and broader networks of specialized suppliers and collaborators.
The policy’s success will depend on execution across multiple dimensions. Land acquisition, historically contentious in India, must proceed smoothly to establish the pharma villages on schedule. Environmental clearances, often a prolonged bureaucratic obstacle, require streamlining without compromising necessary safeguards. Skilled workforce development at unprecedented scale necessitates partnerships with universities and technical institutions to produce graduates trained in biologics manufacturing, bioinformatics, and regulatory science.
Infrastructure—reliable power, high-quality water, waste treatment capacity, and digital connectivity—must be delivered to greenfield sites. Regulatory efficiency, including faster drug approvals and clinical trial authorizations, requires coordination with central authorities beyond state control.
The Broader Implications
If successful, Telangana’s Next-Gen Life Sciences Policy could catalyse a broader transformation in how Indian states approach industrial development. The emphasis on advanced manufacturing, explicit prioritization of sustainability, elevation of R&D to industrial status, and infrastructure decentralization offer a template potentially applicable to other high-value sectors.
More fundamentally, the policy tests whether a subnational government in an emerging economy can successfully orchestrate a strategic industrial transition—moving from cost-based competitive advantages in mature technologies to innovation-based leadership in frontier fields. The answer will emerge over the next five years, measured not just in investment figures and employment numbers, but in the sophistication of the technologies developed, the quality of scientific output, and the resilience of the ecosystem created.
For India’s pharmaceutical industry, long defined by generic drug manufacturing and incremental innovation, Telangana’s policy represents an audacious wager that the next chapter will be written in gene editing laboratories, mRNA synthesis facilities, and precision fermentation reactors—and that Hyderabad, not Boston or Basel, could host that future.
- Naresh Nunna
