Context:

The global nutraceutical industry, valued at an impressive $400 billion, represents a blend of food, biotechnology, and pharmaceuticals, offering products that enhance health and wellbeing beyond basic nutrition. India, with its rich traditional knowledge in Ayurveda and vast biodiversity, stands well-positioned to emerge as a global leader in this sector. Despite having only a 2% share in the global nutraceutical market, recent government initiatives and industry growth indicate an upward trajectory, with a projected market size of USD 18 billion by 2025.

Understanding Nutraceuticals:

• Nutraceuticals, a term combining “nutrient” and “pharmaceutical,” refers to products that are neither purely food nor medicine but possess characteristics of both, enhancing health, controlling symptoms, and even preventing certain diseases.
• Dr. Stephen DeFelice, the founder of the Foundation for Innovation in Medicine, coined the term in 1989. The core idea behind nutraceuticals aligns with the philosophy of “prevention over cure,” reminiscent of Hippocrates’ famous saying, “Let food be your medicine.”
• The products in this category range from dietary supplements to functional foods, targeting both general health and specific health issues like allergies, heart disease, obesity, Alzheimer’s, and Parkinson’s disease.

The Growing Importance of Nutraceuticals With the rise in lifestyle diseases, nutraceuticals have become a significant tool for preventive healthcare. These products contribute to:

1. Strengthening Antioxidant Defenses: By countering oxidative stress, nutraceuticals help protect cells from free radical damage, which is linked to many chronic illnesses.
2. Supporting Cellular Health: Nutraceuticals assist in proper cell growth and development, regulating gene expression and protecting mitochondria, the cellular energy centers.
3. Improving Immune Function: Some nutraceuticals can boost immune responses, reducing susceptibility to infections and diseases.

India’s Unique Position in the Nutraceutical Market:

India’s vast history in Ayurveda and traditional medicine offers it a unique advantage in the global nutraceutical sector. However, despite these strengths, the sector still faces challenges:

1.   Traditional Health Knowledge: India’s traditional knowledge in Ayurveda provides a competitive edge, offering formulations based on medicinal herbs like ashwagandha, curcumin, and bacopa.

2.   Diverse Agroclimatic Zones: India’s 52 agroclimatic zones support the cultivation of a variety of medicinal plants, essential for nutraceuticals.

3.   Extensive Medicinal Plant Resources: India has a robust base of over 1,700 medicinal plants, creating opportunities for scientifically validated products.

4.   Pharmaceutical Expertise: Known globally for its pharmaceutical sector, India possesses the skills needed to maintain high-quality nutraceutical standards.

5.   Startup Ecosystem: A dynamic startup ecosystem has spurred nutraceutical innovation, creating a range of products that address health-conscious consumers’ needs.

Trends and Consumer Behavior Shifts in India

 The COVID-19 pandemic heightened awareness of health and immunity, which has led to a shift in consumer behavior in India:

1. Increased Demand for Immunity-Boosting Products: The public is now more open to supplements like vitamin capsules, chewable tablets, and gummies that boost immunity.
2. Growth in Health Consciousness: Urban populations have become increasingly health-conscious, creating a steady demand for nutraceuticals.
3. Preference for Plant-Based and Preventive Products: With trends moving towards plant-based proteins, vegan Omega-3, probiotics, and sea minerals, the nutraceutical market has aligned with a growing preference for preventive care.

India’s Nutraceutical Market Growth:

India’s nutraceutical market, valued at USD 4-5 billion, is expected to grow significantly. The dietary supplements sector alone is projected to expand at a CAGR of 22%, reaching USD 10.2 billion by 2026. Additionally, foreign direct investment in the nutraceutical industry has risen, with investments increasing from USD 131.4 million in FY12 to USD 584.7 million in FY19.

Challenges Facing India’s Nutraceutical Sector Despite strong growth, several obstacles hinder India’s progress in the global nutraceutical market:

1.    Lack of Defined Industry Classification: Without a clear classification within Indian ministries, nutraceuticals lack targeted support, which affects funding and regulatory clarity.

2.    Complex Regulatory Environment: The absence of a standardized classification and regulatory framework can lead to inconsistent policies, which in turn impact the sector’s growth potential.

Government Initiatives and Task Force Interventions:

To address these challenges, the Council of Scientific and Industrial Research (CSIR) established the Nutraceutical Sector Task Force (TF) in November 2021. Led by the Principal Scientific Adviser to the Government of India, this Task Force includes representatives from various government ministries, along with industry experts. Its objective is to streamline policies, address regulatory issues, and foster growth in the nutraceutical sector.

1. Harmonized System of Nomenclature (HSN) Codes: The Task Force developed India’s first-ever HSN codes specifically for nutraceuticals, aiding in standardized classification and simplifying trade and export processes.
2. Production-Linked Incentive (PLI) Scheme: To bolster domestic production, a PLI scheme was launched for nutraceuticals, offering financial incentives.
3. Dedicated Nutraceutical Industry Panel: A panel under SHEFEXIL (Shellac & Forest Products Export Promotion Council) was created to provide regulatory and export support specifically for the nutraceutical sector.
4. RoDTEP Scheme Inclusion: Nutraceutical exporters now benefit from the Remission of Duties and Taxes on Export Products (RoDTEP) Scheme, reducing export costs. This inclusion aligns with the Biodiversity Act 2023 and enhances compliance with European Union standards.

Investment in Infrastructure and Innovation Hubs:

India’s commitment to nurturing the nutraceutical sector is evident in the establishment of specialized research centers and incubation hubs:

• National Institutions: Leading institutions like NIFTEM-Kundli, Centurion University, and AIC-CSIR-CCMB have set up nutraceutical research and incubation hubs, supporting product development and scientific validation.
• State-Level Centers: Kerala launched India’s first government-backed Nutraceutical Centre of Excellence in 2024, promoting innovation and infrastructure support for the industry.

Promotion of Nutraceuticals on the Global Stage To enhance international reach, the Department of Commerce has actively promoted India’s nutraceutical industry at global trade fairs, showcasing its strengths and attracting partnerships. Furthermore, collaborations between the Task Force and the Central Board of Indirect Taxes and Customs (CBIC) are underway to establish a unique HSN code, facilitating exports and simplifying customs processes.

Future Investment Opportunities The Indian nutraceutical market offers promising investment opportunities, particularly in herbal supplements, which are projected to account for 30% of the market by 2023 with a CAGR of 20%. The sector is also experiencing rapid growth in B2C (business-to-consumer) and D2C (direct-to-consumer) channels, especially for products that emphasize preventive care and immunity enhancement.

Conclusion:

India’s nutraceutical industry is well on its way to becoming a global leader, leveraging traditional Ayurvedic knowledge and modern scientific advances to produce high-quality nutraceuticals. With strong support from government initiatives, increased consumer demand for health-focused products, and ongoing innovation, India’s nutraceutical market is primed for significant growth. By continuing to address regulatory challenges and investing in infrastructure, India can position itself as a powerhouse in the global nutraceutical sector, attracting both domestic and international partnerships and contributing to global health and wellbeing.