CHAPTER VI

GLOBALIZATION OF AYURVEDA AND

AYURVEDICMEDICINES
6.1 Introduction
Globalization is the new buzzword that has come to dominate the world since
the nineties of the last century with the end of the cold war and the break-up
of the former Soviet Union and the global trend towards the rolling
ball(Balkrishnan,2004).The frontiers of the state with increased reliance on
the market economy and the renewed faith in the private capital and resources,
a process of structural adjustment spurred by the studies and the influences of
world bank and other international organizations have started in many of the
developing countries. Globalization has brought many new opportunities to
developing countries like greater access to developed country markets and
technology transfer which has resulted in improved productivity and higher
standard of living. Globalization has also thrown up new challenges like
growing inequality across and within nations, volatility in financial markets
and environmental deteriorations. Another negative aspect of globalization is
that many developing countries are deprived of the benefits of the process of
globalization. Till nineties the process of globalization of the Indian economy
was constrained by the barriers to trade and investment liberalization of trade.
Investment liberalization of trade, investment and financial flows initiated in
nineties have progressively lowered the barriers to competition and
accelerated the pace of globalization.
According to Stephen Gill globalization is the reduction of transaction cost of
transborder movements of capital and goods thus of factors of production and
goods (Ibid).Guy Brainbant says that the process of globalizationnot only
includes opening up of world trade development of advanced means of
consumption internalization of financial markets, growing importance
MNCs, population migration and more generally

of

increased mobility of

persons, goods,capital,data and ideas but also infections, diseases and

pollution. The term globalization refers to the integration of economies of the

world through uninhibited trade and financial flows as also through mutual
exchange of technology and knowledge (Goyal, 2006:166). It also contains
free inter country movement of labor. Globalization in its literal sense is the
process of globalizing, transformation of some things or phenomena into
global ones. It can be described as a process by which the people of the world
are unified into a single society and function together. This process is a
combination of economic, technological,socio-cultural and political forces.
Globalization is very often used to refer to economic globalization that is
integration of national economies into the international economy through
trade, foreign direct investment, capital flows, migration, and the spread of
technology (Dave, 2007).Herman E. Daly argues that sometimes the terms
internalization and globalization are used interchangeably but there is a slight
formal difference. The term internalization refers to the importance of internal
trade, relations, treaties etc.International means between or among nations.
Globalization means erasure of national boundaries for economic purposes.
International trade becomes interregional trade.In the context of India this
implies opening up the economy to foreign direct investment by providing
facilities to foreign companies to invest in different fields of economic activity
in India; removing constraints and obstacles to the entry of MNCs in India,
allowing Indian companies to enter into foreign collaborations and also
encouraging them to set up joint ventures abroad, carrying out massive import
liberalization programmes by switching over from quantitative restrictions to
tariffs and import duties.

History of Globalization
The word globalization has been used by economists since 1981, however this
concept did not become popular until the later half of the 1980s and
1990s.Globalisation began a bit before the turn of the 16th century in Portugal.
The countrys global explorations in the 16th century linked continents,
economies and cultures as never before.

Globalization is viewed as a centurys long process, tracking the expansion of

human population and the growth of civilization that has accelerated
dramatically in the past fifty years. Early forms of globalization existed during
the Roman Empire. The Islamic golden age is also an example, when Muslim
traders and explorers established an early global economy across the old
world resulting in a globalization of crops, trade, knowledge and technology
(Websters Dictionary)
In the 17th century, globalization became a business phenomenon when the
Dutch East India Company, which is often described as the first multinational
corporation, was established. Due to high risks involved in international trade,
the Dutch East India Company became the first company in the world to share
and enable joint ownership through the issuing of shares: an important drive
for globalization. In the 19th century it was sometimes called The First Era of
Globalization a period characterized by rapid growth in international trade
and investment, between the European imperial powers, their colonies, and
later United States. It was in this period that areas of sub-Saharan Africa and
the Island Pacific were incorporated into the world system. During the preworld war I period of 1870 to 1914, there was rapid integration of the
economies in terms of trade flows, movement of capital and migration of
people. The growth of globalization was mainly led by the technological
forces in the fields of transport and communication. There were fewer barriers
to flow of trade and people across the geographical boundaries. There were no
passport and visa requirements. The pace of globalization decelerated between
the First and the Second World War. The inter-war period witnessed the
erection of various barriers to restrict free movement of goods and services.
The First Era of Globalization began to break down at the beginning of the
First World War, and later collapsed during the gold standard crisis in the late
1920s and early 1930s.
After World War II, all the leading countries resolved not to repeat the
mistakes they had committed previously by opting for isolation (Rangarajan,
2006). Although after 1945, there was a drive to increased integration; it took

a long time to reach the pre-world war I level. Most of the developing
countries which gained independence from the colonial rule in the immediate
post-world war II period followed an import substitution industrialization
regime. The Soviet bloc countries were also shielded from the process of
global economic integration. However in the last two decades the process of
globalization gathered the momentum. The former Soviet bloc countries are
getting integrated with the global economy. More and more developing
countries are turning towards outward oriented policy of growth. Rapid pace
of globalization observed today is an outcome of new information technology
which has influenced market integration, efficiency and industrial
organization. Globalization of financial markets has far outpaced the
integration of product markets.
Modern Globalization
Globalization in the era since World War II was first the result of planning by
economists, business interests, and politicians who recognized the costs
associated with

protectionism

and declining international

economic

integration. International institutions like World Bank and International

Monetary Fund were founded with the intention of promoting growth and
managing the adverse effects of globalization. Globalization was facilitated by
advances in technology which have reduced the costs of trade, and trade
negotiation rounds, originally under the auspices of GATT, which led to a
series of agreements to remove restrictions on free trade.
Since World War II, barriers to international trade have been considerably
lowered through international agreements- General Agreement on Trade and
Tariff (GATT). Particular initiatives carried out as a result of GATT and the
World Trade Organization (WTO) has included the following:
Promotion of Free Trade:
Reduced transportation costs especially from development.
Reduction or elimination of tariffs; construction of free trade zones
with small or no tariffs

Reduction or elimination of capital controls

Reduction, elimination, or harmonization of subsidies for local
businesses

Restriction of Free Trade

Harmonization of intellectual property laws across the majority of

states, with more restrictions.

Supranational recognition of intellectual property restrictions (e. g.

patents granted by China would be recognized in the United States)

The Uruguay Round (1984 to 1995) led to treaty to create the World Trade
Organization (WTO), to mediate trade disputes and set up a uniform platform
of trading. Other bi-and multilateral trade agreements, including sections of
Europes Maastricht Treaty and the North American Trade Agreement
(NAFTA) have also been signed in pursuit of the goal of reducing tariffs and
barriers to trade.
World exports increased from 8.55% of gross world product in 1970 to 16%
of gross world product in 2001.
6.2 Measuring Globalization
Looking specifically at economic globalization, it can be measured in
different ways. These four ways are four economic flows that characterize
globalization:
a) Goods centreand services, e.g. exports plus imports as a proportion of
national income or per capita of population.
b) Labour/people, e.g. net migration rate, inward or outward migration flows,
weighted by population.
c) Capital, e.g. inward or outward direct investment as a proportion of national
income or per head of population
d) Technology populations, e.g. international research and development flows,
proportion of using particular invention.

Since globalization is not only an economic phenomenon, a multivariate

approach to measure globalization is the recent index calculated by the Swiss
think tank KOF. This index measures the three main dimensions of
globalization, economic, social and political. In addition to three indices
measuring these dimensions, an overall index of globalization and sub indices
referring to actual economic flows, economic restrictions, data on personal
contacts, data on information flows, and data on cultural proximity is
calculated.Data is available on yearly basis for 122 countries. According to
the index the worlds most globalised country is Belgium, followed by
Austria, Sweden, the United Kingdom and the Netherlands. The least
globalisedcountries according to the KOF-index are Haiti, Myanmar, the
Central

African

Republic

and

Burundi.

Other

measures

conceptualizeglobalization as diffusion and develop interactive procedure to

capture the degree of its impact.
According to another globalization index, published in 2006, Singapore,
Ireland, Switzerland, the U.S.,the Netherlands, Canada and Denmark are the
most globalised, while Egypt, Indonesia, India and Iran are the least
globalised among listed.
Globalization has been identified with the policy reforms of 1991 in India
(Goyal, 2006:167).

6.3 The Important Reform Measures (Step towards Globalization)

Indian economy faced major crisis in July 1991, when the stock of foreign
currency was approximately $ 1 billion. Inflation increased to an annual rate
of 17 percent; fiscal deficit was also quite high and foreign investors and NRI
lost confidence in Indian economy. Along with this domestic crisis, many
unpredictable changes swept the economies of nations in Western and Eastern
Europe, South East Asia,Latin America and elsewhere, around the same time.
These economic changes at home and abroad made it mandatory to bring total
change in our economic policies and programmes. Major measures as apart of

the liberalization and globalization strategy in the early nineties included the
following:

Devaluation: The first step towards globalization was the devaluation

of Indian currency by 18 to 19 percent against major currencies in the
international foreign exchange market. This measure intended to
resolve acute BOP crisis.

Disinvestment: In order to make the process of globalization smooth,

privatization and liberalization policies are moving along as well.
Under the privatization scheme, most of the public sector undertakings
have been/ are sold to private sector.

Dismantling of industrial licensing regime: At present only six

industries are under compulsory licensing mainly due to environmental
safety and strategic considerations. As a result of liberalized licensing
policy locational policy is significantly amended. Now no industrial
approval is necessary for locations not falling within 25 kms. Of the
periphery of cities having a population of more than one million.

Allowing foreign direct investment (FDI): Foreign direct investment

across a wide spectrum of industries facilitated non-debt flows for
these industries. Under a liberal and transparent foreign investment
regime most activities are open to foreign investment on automatic
route without any limit on extent of foreign ownership. Some of the
recent initiatives taken to further liberalize the FDI regime includes
opening up of sectors such as Insurance (up to 26%); development of
integrated township (up to 100%); defence industry (up to 26%);tea
plantation (up to 100% subject to disinvestment of 26% within five
years to FDI); enhancement of FDI limit in private sector banking,
allowing FDI up to 100% under the automatic route for most
manufacturing activities in SEZs. Investment facilitation measures are
strengthened through Foreign Investment Implementation Authority.

Non Resident Indian Schemes: General policy and facilities for foreign
direct investment as available to foreign investors/companies are fully

applicable to NRIs as well. In addition to this the Government has

extended some concessions especially for NRIs and overseas corporate
bodies having more than 60% stake by NRIs.

Throwing open industries reserved for the public sector to private

participation- Now only three industries are reserved for the public
sector.

Abolition of the MRTP Act, which necessitated prior approval for

capacity expansion.

The removal of quantitative restrictions on imports.

The reduction of the peak customs tariff from over 300 percent prior to
30 percent rate that applies now.

Severe restrictions on short-term debt and allowing external

commercial borrowings based on external debt sustainability.

Wide- ranging financial sector reforms in the banking, capital markets,

ad insurance sectors, including the deregulation of interest rates, strong
regulation and supervisory systems, and the introduction of
foreign/private sector competition.

Globalization is a process of increasing the connectivity and interdependence

of the worlds markets and businesses. This process seems to be accelerated in
the last two decades as technological advances make it easier for people to
travel, communicate and do business internationally. Two major recent
driving forces are advances in telecommunications, infrastructure and the rise
of the internet. When different economies are connected theopportunities as
well as competition increase.Globalization offers opportunities on one side
and challenges on the other. It has offered opportunities in the area of
investment, industrial growth, technology and competition and on the other
hand it has created threats in the area of small industries, traditional industries
competition, poverty and environment.
6.4 Opportunities offered by globalization

Globalization has created tremendous opportunities as far as the following

areas are concerned.

Globalization and Investment

Indian economy is interacting with the rest of the world with the growth of
globalization and economic liberalization. Foreign direct investment in India
between 1992 and 2005 was recorded as Rs.3, 25,000 crore. FDI may be made
through the acquisition of an existing entity or the establishment of new
enterprise. Mergers and acquisitions are very important for market entry and
are supposed to be an important growth strategy. It may be used to acquire a
new technology. It may also help in reducing cost and competition. One
important advantage of mergers and acquisitions is that it provides instant
access to markets and distribution network (Dave, 2007:6).
Globalization and Industrial Growth
Globalization creates opportunities if it is genuinely free. Indias labour
intensive products can find markets abroad. This in turn can create new job
opportunities in India. Globalization boosted industrial production and
promoted exports. The information technology is one of the areas of industrial
growth. IT industrys basic input is skilled man power. India has the largest
pool of skilled and semi-skilled work force which is utilized effectively in IT
industry.
Globalization and Technology
Organizational and technological innovations, superior product quality and
customer satisfaction are major determinants of firm level competitiveness in
the global market place. Global entrepreneurship with innovative outlook
always searches for changes, responds to it and exploits as an opportunity.
They are the ones who can make a difference, while ordinary managers are
effective only in managing stable, routine and cost efficient business. Global

entrepreneurs are high achievers. They possess an idea or a distinct way of

doing things.
Challenges of Globalization
Globalization involves some risks. The major economic challenges faced by
Globalization are as follows:
1. The benefits of economic integration have primarily extended to the
industrialized countries in the last 10 to 20 years along with a group of
developing countries, encompassing three Billion inhabitants. According
to World Bank classification, a similar number of people live on less than
$ 2 a day. Such poverty is the greatest challenge for stability and peace in
21st century.
2. Globalization of financial markets has been accompanied by disturbing
financial crises in emerging market economies. The causes of these crises
are complex. However a common feature has often been over
indebtedness and massive rehearsals in capital flows, leading to severe
recession accompanied by a sharp rise in unemployment.
3. Globalization

exerts

pressure

on

the

environment.

Domestic

environmental protection policies alone are not sufficient to deal with

this pressure. Globalization has to face this challenge because the
favourable environment has become global public good (Kohler, 2003).

Making of the Global Entrepreneur- Implications

The making of the global entrepreneur has its implications at four levels namely
firm, industry, policy and management and technological education.

At the firm level: The global entrepreneur must get the desired challenges.
He must be able to stretch himself and upgrade his skills by in house
training.

At industry level: Several chambers of commerce, trade associations and

representative industry groups will have to adopt a strategic approach in
order to ensure that Indian firms bench mark beyond what exists. They
should be able to set the standard for the rest of the world.

At the policy level: The general environment now is gradually becoming

supportive to well qualified and competent entrepreneurs.

Educational and research institutions act as nurseries for proving world

class engineers,scientists and managers.

6.5 Effects of Globalization on the World

Globalization has various aspects which bring positive and negative effects for the
world in different ways.
Positive Effects
Industrial - emergence of worldwide production markets and broader access to a
range of foreign products for consumers and companies. Particularly movement
of material and goods between and within transnationalcorporations and access to
goods by wealthier nations and individuals at the expense of poorer nations and
individuals who supply thelabour.
Financial emergence of worldwide financial markets and better access to
external financing for corporate, national and sub national borrowers. The
emergence of under or unregulated foreign exchange and speculative markets led
to inflated wealth of investors and artificial inflation of commodities.
Economic- realization of global common market,based on the freedom of
exchange of goods and capital
.Political- political globalization is the creation of a world government which
regulates the relationships among nations and guarantees the rights arising from
social and economic globalization. Politically the United States has enjoyed the
position of power among the world powers; in part due to its strong and wealthy
economy. China has experienced tremendous growth in the last decade as a result
of globalization and the help of the United States own economy. If China

continues to grow at the projected rate then it will have enough wealth, industry
and technology to compete with the United States for the position of leading
world power. The European Union, Russian Federation and India are among the
other already established world powers which may have the capacity to influence
future world politics.
Informational increase in information flows between geographically remote
locations is a technological change observed in the process of globalization.
Advent of fiber optic communications,satellites, and increased availability of
internet facilitated the revolution in information and communication technology.
Cultural growth of cross cultural contacts, advent of new categories of
consciousness and identities such as globalism, which embodies cultural
diffusion, the desire to consume and enjoy foreign products and ideas and adopt
new technology and practices.
Ecological-globalization leads to environmental challenges like climate change,
cross boundary water and air pollution, over-fishing of the ocean, and the spread
of invasive species, which cannot be solved without international cooperation.
Many factories are built in developing countries where thy can pollute freely.
Poorer countries have to suffer in this process whereas the wealthier countries are
at the benefit.
Social-Globalization facilitated increased circulation of people of all nations with
fewer restrictions. But only the people of wealthier nations can afford
international travel due to of rising costs of fuel and transport.
Transportation- Technological advancement decreased the traveling time, but
again it is accessible to few rather than many. Globalization resulted in
disproportionate inequitable distribution of resources rather than a benefit to
overall humanity.
International Cultural Exchange- Globalization has spread multiculturalism
and provided better individual access to cultural diversity. The imported culture
can easily supplant the local culture causing reduction in diversity through
hybridization. The most prominent form of this is westernization.Globalization
facilitated greater international travel and tourism for those who can afford

international travel and tourism.Globalization has resulted in greater immigration

including illegal immigration except for the countries like U.K., Canada and the
U.S.A. who have accelerated the process of removing illegal migrants through
modification in laws.Local consumer products and genetically modified
organisms can be easily supplied to other countries.World-wide sporting events
can be organized such as FIFA World cup and the Olympic Games. A set of
universal values can be formed now which shows homogenization of culture.
Technical- Globalization has led to technical development in the form of
development of global communication infrastructure, communication satellites,
internet, submarine fiber optic cable and wireless telephones.
Legal/ Ethical -Globalization has brought the following worldwide legal/ethical
changes such as the creation of the international criminal court and international
justice movements,crime importation and raising awareness of global crimefighting efforts and cooperation.
Sexual Awareness-It is very easy to focus on economic aspects of globalization.
Globalization may also have social effects such as changes in sexual inequality
and greater awareness about different types of gender discrimination throughout
the world.
As far as developing countries are concerned, globalization has resulted in rising
share of these countries in aggregate world output and aggregate world exports.
The share of developing countries in aggregate world output has increased from
17.9 percent in 1988-90 to 40.4 percent in 2000. Their share in aggregate world
exports increased from 20.6 percent in 1988-90 to 29.9 percent in 2000. The
growth rate of developing countries both in terms of GDP and per capita GDP has
been higher than those of the industrial countries.

Negative Effects

Though the world as a whole is benefitted from globalization still there are some
negative and marginalizing effects of globalization.

Globalization leads to a more inequitable distribution of income among countries

and within countries.Globalization leads to inequality because globalization
emphasizes efficiency and gains accrue to those countries which are favourably
endowed with natural and human resources. Technological base of these countries
is not only wide but highly sophisticated. Examples of the badly skewed
distribution among countries of the benefits of globalization can be shown from
the following data from the period 1980 to 1997. While world per capita income
increased, per capita income contracted in fifty nine countries, widening income
disparities. Exports of goods and services increased at less than 5 percent annually
in forty six countries and at less than 1 percent a year in nine countries.
As far as financial flows are concerned, the majority (58%) of flows of Foreign
Direct Investment in the 90s went to developed countries. 85% of the FDI that
went to developing economies, went to only 20 countries, with the bottom sixteen
of these receiving less than what the top two got, and for the nine countries the
flows have been negative.
The benefits from the Uruguay round are also expected to be unbalanced, with
70% accruing to the developed countries and 30% to the developing countries.
The information and communication technology has created a gap of its own. The
exponential growth of internet also reveals disparity. In 1998, industrial countries
accounting for 15% of the world population had 88 percent of internet users and
South Asia having 20 percent of the world population had less than one percent of
the internet users.
While trade benefits all countries, greater gains accrue to industrially advanced
countries. However there are two changes with respect to international trade
which may work to the advantage of the developing countries.
First, the industrially advanced countries are leaving certain areas of production
free which can be filled in by developing countries.
Second, international trade is no longer determined by the distribution of natural
resources. On the contrary human resources have emerged as more important due
to the improvement in information technology. Productive activities are becoming

knowledge intensive rather than resource intensive. A globalised economy

with increased specialization can lead to improved productivity and faster growth.
Apart from the possible inequality in income distribution among the countries,
globalization leads to widening income gaps within the countries as well. This is
true for developed as well as developing countries. Globalizationmay benefit even
within a country, those who have the skills and the technology. The higher growth
rate achieved by an economy can be at the expense of declining incomes of the
people. Income inequality is rising in many countries.There is increase in job and
income insecurity especially for unskilled labor.
Within developing countries, the increased world agricultural prices expected to
result from Uruguay Round should benefit those in agriculture. The urban poor
will suffer when food prices rise, but will gain from employment in new export
industries.
Another negative aspect of globalization is that globally integrated markets have
financial volatility as a permanent feature. Human cost of such financial volatility
is very high and it may reverse the process of human development
Globalization results in the loss of autonomy while pursuing the economic
policies. In a highly integrated world economy it is true that one country cannot
pursue policies which are not in consonance with the worldwide trends. As the
nations come together whether, it is in the political, social or economic arena,
some sacrifice of sovereignty is inevitable.
Globalization establishes a closer linkage between different countries so the
problems arisingin one country easily get spread in other countries and thus the
problems specific to one country become global ultimately.
Globalization results in spread of diseases, increasing opportunities for crime,
drug trafficking and loss of cultural identity.
Women are also among the first to lose their employment when economic
crunches occur, such as those resulting from financial volatility. Women also
predominate in informal subcontracting, which is on the rise under globalization.

6.6 Impact of Globalization on Indian Economy

India opened up the economy as a result of major crisis due to foreign exchange
crunch. Major measures initiated as a part of the liberalization and globalization
strategy in the early nineties included scrapping of the industrial regime, reduction
in the number of areas reserved for the public sector, amendment of monopoly
and restrictive trade practices act, start of the privatization programme, reduction
in tariff rates and change over to market determined exchange rates. Over the
years there has been steady liberalization of the current account transactions, more
and more sectors opened up for foreign direct investments and portfolio
investments facilitating entry of investors in telecom, roads , ports, airports,
insurance and other major sectors.
Globalization has intensified interdependence and competition between
economies in the world market. Economic reforms experienced by India brought
the following significant benefits for the county along with globalization.
Globalization and Poverty
Globalization in the form of increased integration through trade and investment is
an important reason why much progress has been made in reducing poverty and
global inequality over recent decades. The proportion of world population living
in poverty has been steadily declining and in recent years the absolute number of
poor has fallen despite strong population growth in poor countries
Growth of the Economy
The liberalization of the domestic economy and the increasing integration of India
with the global economy have helped step up GDP growth rate, which was just
3% in1970 and GDP growth in countries like Brazil, Indonesia, Korea, and
Mexico was more than twice that of India. Though Indias average annual growth
rate doubled in eighties and reached upto 5.9%, it was still lower than the growth
rate in China, Korea and Indonesia.Growth of GDP improved Indias global
position from eighth in 1991 to fourth in 2001. During 1991-92, the first year of
economic reform, Indian economy grew by 0.9% only, however the GDP growth

accelerated to 5.3% in 1992-93 and 6.2% in 1993-94. In 2003-04 India achieved a

growth rate of more than 8%.
Structure of the Economy
Due to globalization not only GDP has increased but the direction of growth in
the sectors has also been changed. Earlier the maximum part of the GDP in the
economy was generated from the primary sector, but now the service sector
contributes the maximum part of GDP. It contributes more than 57% of GDP.
India ranks eighteenth among the worlds leading exporter of services with a
share of 1.3% in world exports. The service sector is expected to benefit from the
ongoing liberalization of the foreign investment in the sector. Software and BPO
sectors have recorded an exponential growth in recent years. Growth rate of GDP
from the major sectors can be seen from the following table.

Table 6.1: Structure of the economy (Percentage)

% of GDP
Agriculture
Industry
Services

1984-85
35.2
26.1
38.7

2002-03
26.5
22.1
51.4

2003-04
21.7
21.6
56.7

2004-05
20.5
21.9
57.6

Source: Economic Survey 2000 and 2005

Foreign Direct Investment Inflows
FDI increased from around US $ 100 million in 1990-91 to US $ 5536 million in
2004-05.
Features of FDI Inflows
The current account deficit has hovered at less than 1% of GDP in recent years.
External sector of Indian economy has become stronger which is evident from the
sizable accumulation of Indias foreign exchange reserves comprising foreign
currency assets, gold, SDRs and the reserve position with the IMF which touched
US $ 141.5 billion as on March 31st 2005. These were about US $ 1 billion during
1990-91 balance of payment crisis.

The composition of debt is also favourable. Short term debt amounts to 3.5 per
cent of external debt and concessional debt amounts to 36.5 per cent of total debt.
The external debt looks sustainable according to a range of measures of
indebtedness. Both debt service payments as a proportion of current receipts, and
the external debt to GDP ratio have been falling steadily during 1990s, and
currently stand at around 17 per cent and 22 per cent, respectively.
Foreign Trade (Exports and Imports)
Indias imports in 2004-05 stood at US $ 107 billion recording an increase of
35.62 per cent compared to US $ 79 billion in the previous year(Goyal,2006).
Exports also increased by 24 per cent as compared to previous year. It stood at US
$ 79 billion in 2004-05 compared to US $ 63 billion in the previous year. Oil
imports increased by 19 per cent and non-oil imports increased by 33.62 per cent
during the same period.

Table 6.2: Foreign Trade (US $ Million)

Trade
Total
exports
Total
imports
Total
balance

1990-91
18477

2002-03
52719

2003-04
63843

2004-05
79247

27915

61412

79149

107066

-9438

-8693

-14307

-27819

Source-Reserve Bank of India Annual Report 2004-05

Tariff Rates
The Indian tariff rates reduced sharply over the decade from a weighted average
of 72.5% in1991-92 to 24.6% in 1996-97. Though tariff rates went up slowly in
the late nineties it touched 35.1% in 2001-02. India is committed to reduce tariff

rate. Most non-tariff barriers have been dismantled by March 2002, including
almost all quantitative restrictions
Economic reforms in the Indian economy initiated since July 1991 have led to
fiscal consolidation, control of inflation to some extent, increase in foreign
exchange reserves and greater foreign investment and technology towards India.
This has helped the Indian economy to grow at a faster rate.
Comparison with other Developing Countries

Indias share of world merchandise exports increased from 0.05per cent to

0.07per cent over the past 20 years. Over the same period Chinas share
has tripled to almost 4 per cent.

Indias share of global trade is similar to that of the Philippines, an economy six
times smaller according to IMF estimates.

Over the past decade FDI flows into India have averaged around 0.5 per
cent of GDP against 5 per cent for China and 5.5 per cent for Brazil. FDI
inflows to China now exceed US $ 50 billion annually. It is only US $ 4
billion in case of India.

6.7 Globalization and Indian Health Systems

Traditional medicines and healthcare systems have been in existence all over the
world since many centuries. World Health Organization (WHO) research in
developing countries has shown that costs of allopathic system of medicine for
curing diseases are quite high compared to traditional medicines and are beyond
the reach of the common man. People in developed countries are now aware about
the adverse effects of chemical drugs and they have also started showing
preference for traditional medicines.Indigenous medicines of most of the
countries across the globe remained unutilized for several years. However over
the last few decades intense efforts have been made by various governments,
international agencies, non-government organizations and other such stakeholders
to explore their scientific base for the betterment of human life. India, having one

of the richest and most diverse heritages in the world is not an exception to this
global trend. Traditional medicines, now covered under Indian systems of
medicines are embodied in Ayurveda, Siddha and Unani systems. These systems
of medicines are based on not only herbs but also animal substances, minerals and
other natural resources. There has been a renewal of focus on systems of
medicines that are nature friendly.
Traditional medicines and healthcare systems have been in existence for
manycenturies, having been developed in several communities as a response to
the objectives of maintaining health in a conventional as well as holistic way.
World Health Organization defines traditional medicines as including diverse
health practices, approaches,knowledge and beliefs incorporating plant,animal
and /or mineral based medicines,spiritual therapies,manual techniques and
exercises applied singularly or in combination to maintain wellbeing,as well as to
treat, diagnose or prevent illness (Ayush, 2005).
WHO research in developing countries has shown that costs of allopathic system
of medicines for curing diseases, unlike traditional medicines are very high and
are beyond the reach of the common man. Similarly, concern about the adverse
effects of chemical drugs and changing perspectives about the effects of modern
medicines and their usage, are now manifesting themselves in the form of
increased application of traditional medicines, even in developed country markets.
Over the last few decades governments, international agencies, non government
organizations have been taking efforts to disclose the mysteries of traditional
medicines and also explore their scientific base for the betterment of humanity.
Some of the forms of traditional medicine are the traditional Chinese medicine,
Indian Ayurveda and Arabic Unani medicine. A wide range of indigenous
traditional medicines has also been developed throughout developing and
developed economies and other cultures.
These forms of medicines are influenced by factors such as history, personal
attitudes and philosophy;their practice may vary greatly from country to country
and from region to region. Their theory and application differ significantly from
those of allopathic medicines.

Ayurveda, Yoga and naturopathy, Unani, Siddha and Homeopathy or AYUSH as

they are generally called are the most prevalent forms of Traditional Medicine
(TM). These medicinal systems originated in India as well as outside but got
adopted here in the course of the time. These systems of traditional medicines are
popular in large number of states in the country as follows:
i)Ayurveda- Kerala, Himachal Pradesh, Gujarat, Karnataka, Andhra Pradesh,
Madhya Pradesh, Rajasthan, Uttar Pradesh, Uttaranchal and Orissa
ii) Unani-Andhra Pradesh, Karnataka, Bihar, Madhya Pradesh, Uttar Pradesh,
Delhi and Rajasthan.
iii) Homeopathy- Uttar Pradesh, Kerala, West Bengal, Orissa, Andhra Pradesh,
Delhi, Bihar and North Eastern states.
WHO has defined three types of health systems.Anofficially recognized element
of healthcare namely Integrative, Inclusive and Tolerant.Integrative system is one
in which the traditional medicine is officially recognized and incorporated into all
areas of health care provision. Worldwide, only China, the Democratic Peoples
Republic of Korea, the Republic of Korea and VietNam can be considered to have
an Integrative system.
The Indian healthcare system falls into the inclusive category, in which the
traditional medicine is recognized but is not fully integrated into all aspects of
healthcare. Traditional medicine might not be available at all healthcare levels.
Health insurance might not cover treatment with such Traditional medicines.
Official education in Traditional medicine might not be available at university
level.
Traditional medicines in India have now undergone change in nomenclature, to be
known as Indian systems of medicine or ISM. These systems are embodied in
Ayurveda, Siddha and Unanisystem.These medicines are in complete harmony
with nature, since they are based on not only herbs but also animal substances,
minerals and other natural resources.
Since people prefer to use anything that is plant and naturebased, Indian systems
of medicines(ISM), in general and Ayurveda in particular offer tremendous
opportunities for exports. Indian systems of medicines operate through the

knowledge of the medicinal properties of herbs,plants, animals, minerals and

applicable natural resources. Treatment under Ayurveda and Siddha is individual
oriented and hence very specific.Medicinal plants provide 80% of raw material
requiredfor ISM, so the effectiveness of this system depends upon the proper use
and sustained availability of raw material, free from adulteration. There is
growing demand for natural products including items of medicinal value,
pharmaceuticals, food supplements and cosmetics in the international markets.
Increasing costs of modern medicines is also responsible for growing demand for
natural products and growing interests in the cultivation and preservation of
medicinal plants used in them.
According to WHO over 80% of the world population relies on the traditional
systems of medicines,largely plant based,to meet their primary healthcare needs.
ISM emphasizes prevention of diseases,maintenance of health and life styles.ISM
includes both the preventive and curative aspects of life. These systems are
holistic,safe and effective. ISM is natural therefore food supplements and
healthcare concerns occupy important position in Ayurveda.
Ayurveda is a form of empirical medicine rooted in the revelation of the Rishis
who passed it down through oral tradition and recorded it in the shastra, sacred
Hindu texts.
Ayurveda is the most prevalent form of traditional Indian medicines.Ayurveda in
India has been a part of not only bodily health but also of spiritual well being.
Ayurveda is indigenous to India, both in genesis and development for prevention
and cure of diseases. It is treasure of knowledge that is actually a blessing from
Ayurveda scholars. Texts written by Charak and Sushrut are totally dedicated to
dissemination of Ayurveda knowledge. Ayurveda is true science of life,
prevention and longevity.
The system of Ayurveda initially used minerals, plants and herbs, and animal
products from plants that were later integrated with animal source products such
as honey,milk,ghee and animal fats. These materials had limited applications in
Ayurvedicmedica so efforts were made to find better alternatives for them. Finally
minerals and metal compounds were found to be better alternatives for preparing

various drugs of therapeutic use. Mineral preparations emerged more potent as

compared to the herbal products. These preparations are known asRasChikitsa.
RasShastra came to be known as science dealing with the use of metals and
minerals, mercury being the fulcrum of the science of the physicians. In addition
to mercury many other metals and minerals, precious and semi-precious stones
found applications in Ayurveda therapeutic drugs. Of the various products of RasshastraBhasma is a notable one.Bhasmas are alkaline ashes derived from
organic as well as inorganic substances.
Ayurveda has made tremendous progress in developing diagnostic methods and
therapeutic procedures. It has discovered several medicinal properties of herbs,
plants, trees andspecies. But development of Ayurveda received tremendous
setback from foreign invasions. Wise Indian physicians maintained secret of their
expertise to protect the knowledge of Ayurveda from further damages. This
tendency in turn led to further decline of the system. In 1835 Ayurveda along
with other traditional forms of medicines was banned by British when colonized
India and Ayurveda were forced to go underground. It resurfaced in the early
1900 when it was heavily influenced by allopathic and conventional medicines.
The advent of modern medicine system caused the severest setback to the
Ayurvedic system. Revival of this system began soon after independence,
primarily due to the initiatives taken by the government to develop this system
qualitatively with standardized specifications for some preparations, with a view
to make our products acceptable, both in the national and international markets
alike. After independence, Ayurveda received greater legitimacy and government
support as a home grown, inexpensiveand efficient way to improve peoples
health. In 1970 WHO recognized Ayurveda as a health science and as a traditional
health system. Today more than 70% of the Indian population use Ayurveda as
their primary healthcare. The Indian government allocates nearly 1.6% of its
medical budget to Ayurvedic medicines.
Ayurveda is the worlds most ancient methodical medical knowledge system. The
earliest doctrines of Indian medicines, the CharakSamhita and the SushrutSamhita

show that the art and science of Ayurveda practice was well developed and
systematically organized in that period.
The principles of Ayurveda are universal but the practices are localized and
individualized. Ayurveda is an eco-friendly and cost-effective system of
medicines which requires the presence of expert or well-trained and experienced
Ayurveda physicians. In many parts of the world Ayurveda is practiced without
the knowledge of the word Ayurveda. The American Indians have long applied
the principles of Ayurveda. Northern Europe uses home remedies that are in time
with the Ayurveda principles; and much of aboriginal therapies in Ayurveda
resemble authentic Ayurveda practices.
In the last two decades, Ayurveda due to its holistic approach using lifestyle
medication, healthy diet and safe natural drugs, has attracted a large population in
different countries around the world. Today Ayurveda and Chinese medicines top
the list of the comparative alternative medicines/ traditional medicines therapies
in popularity across the globe.

Globalization and Indian System of Medicines

Indigenous medicines of most of the countries across the globe remained

unutilized for several years. However over the last few decades intense efforts
have been made by various governments, international agencies, non-government
organizations and other such stakeholders to explore their scientific base for the
betterment of human life. India, having one of the richest and most diverse
heritages in the world is not an exception to this global trend. Traditional
medicines, now covered under Indian systems of medicines are embodied in
Ayurveda, Siddha and Unani systems. Globalization of Ayurveda and Ayurvedic
medicines has created tremendous opportunities for the manufacturers of these
medicines.
The most crucial dimension of globalization and liberalization is exports.
Traditional medicines are now globalizing slowly through worldwide exports of
these medicines and its knowledge. Exim bank has put forward certain issues

related to evolution of traditional medicines in the global health market. This

study identified the major weaknesses of the Indian system of medicines
industry(ISM) which are coming in way of its globalization efforts. The present
study considered two major categories of weaknesses for in-depth analysis (Exim
Bank, 2005).

Market related weakness - lack of identity, brand equity and marketing

mechanism acceptable to the end user markets.

Research related weakness - Non-availability of standardization facilities,

research and development facilities, institutional support facilities and
primitive manufacturing process resulting in unacceptable levels of
quality.

Medicines under ISM are prepared with the objectives of prevention of diseases,
maintenance of health and life styles. ISM thus deals with both prevention and
curative aspects of life. These systems of medicines are holistic and are
considered to be safe and effective. It is natural therefore the food supplements
and healthcare concerns occupy the centre stage in Ayurveda and Siddha.
Ayurveda and Siddha are twins in essence, both being based on the Panchbhuta
theory and the principle of Tridosha. Indian Ayurveda and Siddha are not
alternate systems of medicines, but a part of the main systems of medicines. They
maintain and nurture the health of a large proportion of population where the
practitioners of modern medicines may not even venture to be around.
The ISM industry in India is broadly classified into two categories:Organized and
Unorganized.
The organized sector- this sector comprises of well established manufacturers
who operate in both domestic and / or international markets. These include
companies adapted to meet modern lifestyles, manufacturing and marketing
methods and also companies that use traditional systems of medicines to prepare
new drugs.
The unorganized sector- This sector includes companies mainly the traditional
manufacturers, in terms of systems, practices and products, micro units
manufacturing only a few products and operating at local levels and

thepracticingAyurvedicdoctors (Vaidyas). The traditional manufacturers also

provide services mainly in the form of Panchkarma and Kshar sutra therapy. It is
the latter category that is predominant all over India, largely due to comparatively
low infrastructure costs, access to raw materials, simple manufacturing processes,
and low investment requirements. It has in some cases caused insufficient
standardization of quality and efficacy of medicines irrespective of being either in
the organized or the unorganized sector. Ayurvedic drug manufacturing
companies are mostly family owned businesses. The origin of most of these
companies can be traced back to a Vaidya whose medicines gained gradual
importance over time, thereby leading to the growth of such units. Most of these
units are controlled and run by third generation owners, having acquired
knowledge from previous generations.

Globalization Initiatives for ISM

Today Ayurveda is gaining growing attention and acceptance all over the world.
There is a growing demand for natural products including items of medicinal
value, pharmaceuticals, food supplements and cosmetics in the international
market.
Realizing the benefits of Ayurveda particularly in creating awareness about the
system amongst masses, many countries have started showing interest in
Ayurveda curriculum and research. These include Russia, USA, Japan, Australia,
Netherlands, South Africa, Argentina, UK, France and Italy.

The Indian Traditional Medicine (TM) Sector

WHO defines traditional medicines as including diverse health practices,
approaches, knowledge and beliefs incorporating plant, animal, and/ or mineral
based medicines, spiritual therapies, natural techniques and exercises applied
singularly or in combination to maintain well-being, as well as to treat, diagnose
or prevent illness (AYUSH, 2005)

Some of the forms of traditional medicines are the traditional Chinese medicine,
Indian Ayurveda and Arabic Unani medicines. A wide range of indigenous
traditional medicines have been developed throughout developing and developed
countries.
Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy or AYUSH
forms an important part of traditional medicines.
Indian AYUSH Sector: Overview
The global pharmaceutical market was worth US $ 773 billion in 2008. The
herbal drugs industry shared about US $ 60 billion in the global pharmaceutical
market, which was close to 13%.
The Indian pharmaceutical market was valued at an approximate of Rs. 145
billion as of 2008, and was growing at 8 to 9 percent annually. The production
from AYUSH sector in India during the corresponding period was
approximatelyRs. 23 billion, which constitutes close to 6% of the pharmaceutical
market.
There are approximately 9228 manufacturing units in the country, which
contributed to an approximate turnover of Rs.8800 crore. The sector has been
growing at 10 to 12% rate each year for the last five years.
The exports from the AYUSH sector, from India, were close to Rs. 1000 crores in
2004, of which value added finished product exports were an approximate Rs. 300
crores, and medicinal plants and extracts exports were between Rs 600-700
crores.
Of the 9228 manufacturing units across India, it is estimated that not more than
100 firms would have a turnover of Rs 5.00 crores and above, which brings out a
strong indication of the dominance of small scale operations in the sector.
Sector Potential
The global pharmaceutical industry is expected to exceed US $ 825 billion by the
year 2010 and the share of the traditional medicine sector is expected to grow.
Consumers are slowly but steadily becoming aware of the benefits from AYUSH

remedies. Service seekersin the area of preventive therapies and curative therapies
are picking up.
The traditional Indian medicine and traditional Chinese medicine remain the most
ancient yet living traditions. Global awareness on these two traditional systems
has increased manifold over the past few decades, leading to the acceptance of
such medicine systems.
The traditional medicine therapies/drugs have diversity, flexibility, accessibility
and affordability in many parts of the world.
Nutraceuticals broadly classified as products from natural sources or
manufactured synthetically, which supplement the diet to provide nutrition and
help prevent nutrition related disorders, is another area where the TM sector has
universally accepted applications and where there is scope for the AYUSH
industry to flourish both in the domestic as well as export market. The global
Nutraceutical market is estimated at Rs.5148 billion, with US, Europe and Japan
as key markets. Indias share is meager 0.9%. But the encouraging fact is that the
Indian market has been growing at a much faster rate than the global rates.
Ayurveda has some commonly used nutraceuticals such as Chyawanprash, for
general health and strengthening of immune system; and Brahma Rasayana, for
defense against mental stress. These along with other health supplements could
have ready acceptance both in the domestic as well as export market.
AYUSH sector has bright future when coupled appropriately along with tourism.
Medical tourism in Asia has been rising and people from USA, Australia, Europe
and Canada in particular have been heading to countries like Srilanka, Thailand
and India for curative treatments. These destinations offer good infrastructure,
cheaper treatments, natural beauty and favorable weather.
Medicinal plants, besides providing backbone to the TM sector also present itself
as a potential revenue earner by virtue of its demand and importance. Medicinal
plants provide the principal ingredients of medicines in most traditional systems
of healing. In India there are about 3500 species out of 45,000 which are of
medicinal value. More than 80 percent of these plants are collected from 17
million hectares of Indian forests.

The United States imports thousands of tons of different herbs each year to
support its US $ 3 billion raw herb market. On the other hand, Indias total export
of herbs and herbal products is less than US $ 800 million per year. Thus there is
a global demand and it could be realized by the converged efforts by the industry
and Government. There is a trade opportunity for India that should be optimized.
The Department of Ayush with strong thrust on promotion of Ayush has already
initiated progressive steps. Some of the schemes/ programmes are Scheme for the
development of AYUSH clusters, Scheme for upgrading to Centres of Excellence,
Scheme for Extra Mural Research projects on Indian Systems of Medicine and
Homeopathy and National Mission on Medicinal plants (AYUSH, 2005).
Key Impediments faced by the Sector
a) Traditional medicine has to face the challenges like varying degrees with which
it is recognized by the governments; the lack of some scientific evidence
concerning the efficacy of many of its therapies; difficulties relating to the
protection of indigenous traditional medicine knowledge; and problems in
ensuring its proper use.
b) Traditional medicine practices are concentrated in some traditional families,
which are repository of traditional approaches and knowledge. However there is
very little documentation of such processes, which is endangering the science. A
closer look at the manufacturing processes employed foir preparation of
formulations/ products in the sector reveals that an altered traditional process is
adopted in many cases. Such altered process falls short of meeting the traditional
norms thereby failing to meet the objective of the drug, as stated in the text of
medicinal systems.
c) As the sector is crucial to the healthcare, there are number of trade related
compliances, which are being made mandatory, either in India or abroad. Issues
such as effectiveness of formulations, efficacy, and any side effects are expected
to be documented and certified by appropriate agencies before drugs can be sold
in some markets.

d) The units in the sector in India are finding it difficult to survive due to various
trade compliance issues and other policy restrictions from time to time.
e) In the recent past traditional medicine sector in India has come under criticism
for non-standard, untested, unsafe and harmful formulations. This sector has to
face lot of controversy due to heavy metal issue. After UK, Canada had also
issued an advisory against the use of four Indian Ayurvedic products that were
found by Singapores Health Science Authority to contain high levels of lead and/
or mercury, in July 2006. It is therefore becoming imperative for the units in the
sector to validate their products and processes by adopting modern techniques.
This would enable them to meet basic standards and required scientific protocol
thereby enhancing acceptability of traditional medicines not only in India but
world over.
f) While todays medicine is driven by published evidence, little or no evidence
exists in regard to the treatments offered by Ayurveda. Further research in this
direction is little or non-existent. This is a key deterrent to integration of
Ayurveda into mainstream healthcare. And till it is sorted out, Ayurveda might
continue to be used only on the periphery of mainstream healthcare.
Some of the impediments faced by the AYUSH industry in specific, which
arecrucial to the survival and growth of the sector, are highlighted below;
a) Non-availability of standardized raw material
i) Raw material forms the most crucial part of the value chain for any
sector. The quality of the raw material plays an important role in
manufacturing quality products. Especially when such products are
pertaining to healthcare or medicines, the underlying importance of quality
and standardized raw material cannot be less emphasized.
ii) The industry currently is facing problems which are dual in nature as
follows:
The required amount of raw material as in herbs, medicinal plants, barks,
saplings, roots, shoots is bought by the industry users from various
sources. Hence these raw materials differ in properties which could be due
to the following reasons:
a) Climatic conditions

b) Cultivation techniques
c) Watering/ manure related deficiencies
d) Pre and post harvest care
e) Packing of raw material appropriately
f) Transportation and storing to avoid adulteration
g) Host of other related issues
iii) Even if good quality raw material is available in small quantum, they differ in
properties and are non-standard in nature. This leads to using non-standardraw
material to manufacture products. The end result is that due to non standard raw
materials being used, although the same manufacturing process may be adopted,
the end product has different properties like, colour, smell and texture.
iv)At present, the use and trade of medicinal plants and herbs is unregulated. To
feed the fast growing herbal based industry, a continuous supply of quality
medicinal plant raw material is critical. This needs proper management of plant
resources. However, lack of reliable information about the consumption and
supply of specific plants has been the biggest obstacle in doing so. Also, in India
ninety percent of the raw material used by the herbal industry is taken out from
the forest lands. This has resulted in over exploitation and destruction of its
natural habitation.
Hence the impediment which needs to be addressed is the availability of
standardized raw materials in adequate quantities.
b) Lack of adequate modernization
i) AYUSH sector does not rely on very high level of technology
framework so there is need to upgrade technology to enhance the output of the
traditional medicines manufacturing units.
ii) Units also do have their own testing equipments, which are need based
in nature. Hence there is also a need to update in-house testing equipment from
time to time as markets become more matured and insist on specific types of
testing to be carried out on either raw material, work in progress or finished
products.

iii) As the sector is in close comparison with the pharmaceutical sector,

which is fairly matured, this sector needs to absorb appropriate technologies for
processes like pre processing, extraction, drying, compacting, granulation, particle
size reduction, fermentation, and other related pharmaceutical processes.
c) Lack of standardization led market development:
i) This sector is characterized by large number of medium and small scale
enterprises which are highly fragmented in nature. These enterprises are by
and large managed by medical practitioners from the BAMS stream and do
not have large professional set up for various business related activities.
ii) Some of the areas where the enterprises are in need of professional
assistance are as follows:
a) Documentation of processes- To increase acceptability of processes
and products in the market
b) Process and product validation- To prove efficacy of products
c) Product quality management- Quality control and assurance
d) Compliances to GMP
e) Product registration- At least in Indian context
f) Assistance on intellectual property rights related issues
g) Assistance on complying with various industry standards
h) Marketing and outreach initiatives
i) Mapping new markets
j) Participation in international expos
k) Other need based support
d) Lack of quality assistance and quality control initiatives
i) Quality of products manufactured is generally ensured if dedicated functions of
quality control and quality assurance are working independently. Larger firms
may have such independent functions in-house, whereas the medium, small and
micro sized firms may find it unviable to have such in-house facilities.
ii) Absence of in-house quality control and assurance function means that the
smaller units need to rely on external assistance for such activities. External
service providers being expensive, such firms may sell their products in the
market without confirming to the qualitative aspects of the products. Hence there

is a need to imbibe quality control and quality assurance practices from

accreditable agencies by firms in the sector for better market penetration.
iii) as the sector is yet to unleash its true potential, both in India and abroad, there
are certain basic norms and established accreditation mechanism it needs to meet
in order to be geared up. As a fair amount of units fall in the medium and small
and micro enterprises category, large investments are needed in facilities for
research and development and quality control and quality assurance laboratories.
e) Absence of shared services to reduce cost of business for medium, small and
micro enterprises (MSME):
i) The MSMEs, due to lack of modernization, are finding it difficult to
expandtheir markets and broad base their product line. Enterprises may possess
best of the sector knowledge to manufacture good quality of products. Due to lack
of other facilities around the manufacturing process such as packing, labeling with
adequate information, their outreach is restricted to close circles within the district
or some times within the state.
ii) Given the inability of the enterprises to invest in large scale technology up
gradation, not only is their production capacity limited, but also the form and
manner in which products are packed, labeled and marketed are constrained. It is
imperative that such enterprise completely focuses on broad basing their product
lines
f) Lack of product knowledge disseminated in the market:
i) Although the sector claims of having a very ancient history and medicine
having unique healing properties, firms have not been able to do much to
disseminate such information in either new or current markets. This is largely due
to absence of documentation bringing out information on preparation techniques,
its efficacy, and other success stories on therapies conducted earlier.
ii) It is necessary to disseminate the sector knowledge in the market. Tremendous
efforts are necessary by all industry stakeholders to propagate the practice and its
benefits.
g) Lack of adequate infrastructure facilities

The manufacturing sector in general is facing disadvantages compared to their

international counterparts due to lack of good quality infrastructure/ utilities,
available at affordable prices such as:
i) Reliable power availability at competitive rates
ii) Lack of good quality work space and supporting infrastructure like waste
treatment and discharge, water supply.
Iii) Lack of good testing facilities and absence of institutional mechanism for
technology upgradation for incorporating world class manufacturing practices.
iv)Poor road connectivity from hinterland to ports and airports leading to higher
transportation costs.
h) Limited focus on new product development centres/Research and Development
centres
i) Success of any manufacturing sector can be measured by the amount of
investments that goes into the research and development activities in the sector,
and the amount of new products that are brought into the market on a periodic
basis.
ii) Large firms do have their in-house research and development centre. However
in the case of MSMEs, having such research and development activities in-house,
is a drag on the enterprises financial resources as the benefits of such research and
development initiatives have large gestation time frames to fructify.
iii) MSMEs also need institutional support for developing new products as
regulatory aspects pertaining to non-clinical and clinical trials are to be complied
with.
i) Policy framework restrictions
The units in some case face policy restrictions, which hamper their activities.
Specific instances of such impediments are as follows:
i)Some of the products prepared by the sector requires inputs from animal
sources, as prescribed in the text, however due to policy restrictions units are
unable to procure such raw material from the market.
ii) If units desire some specific value addition in their product and they have to
move it physically from one unit to any other place where such facilities are
available, this is not allowed as per the present status.

iii) Policy compels preparation and packaging of the drugs in the same premises.
Such drugs cannot leave the premises for any intermediate value addition, even if
it is a requirement of the end client and may fetch the unit higher margins.
j)Extension of insurance benefits for therapies
As of date, personal insurance claims are settled by insurance agencies only for
treatment of ailments post hospitalization. Therapies under the AYUSH sector,
even for the treatment of critical ailments are not covered under the insurance
purview. There have been sporadic cases where some private insurance agencies
have extended partial insurance benefits, for the treatment under this sector.

6.8 Global Revival of Traditional Medicines

The sudden resurgence of traditional medicines forced the agencies like WHO
and NGOs like the National Institute of Health, USA to develop a new
perspective for traditional medicines in the scientific and political circles
(Patel,n.d.:159). The WHO traditional medicine strategy 2002-2005 lays
guidelines for formulating policies to integrate traditional medicines or
complementary alternative medicines(CAM) into mainstream health care to
ensure safety, efficacy and quality of traditional medicines or complementary
alternative medicines to increase access to these medicines and promote its
rational use. The national institute of health opened the National centre for
complementary and alternative medicines (NCCAM) in 1998.A five year plan
was also formulated to promote clinical research on CAM which is examined
under five domains-Alternative medical systems, Mind-body interventions,
Biologically based therapies, Manipulative and Body based methods and Energy
therapies. The above documents facilitate the scientific and political initiative to
regulate the practice of TM/CAM the world over. The number of Americans
using CAM increased from 60 million to 83 million between 1990 and 1997.
Visits to CAM practitioners increased by 47%; exceeding visits to MDs by 243
million. It has been observed that Americans spend more money for CAM than
for conventional health care. Ayurveda is one of the most popularly usedCAM/

TM therapies in the world along with traditional Chinese medicines. The healing
potential of Ayurveda has opened up a new front of health tourism in India, where
people all over the world come over for availing the benefits of Ayurveda therapy
for many chronic ailments and also for diseases, where modern medicine has
nothing substantial to offer.
Global Resurgence of Ayurveda
The global profile of Ayurveda can be analyzed from three different angles. With
respect to the first aspect of popularity, Ayurveda is best identified as a holistic
health care system for wellness, integrating the mind, body, spirit trio. A few
committed individuals and institutions contributed significantly in creating
awareness regarding Ayurveda among various countries of the world.
RenownedAyurvedists and people with scientific background propagated
Ayurveda in America, Japan, Australia, Italy, Germany etc. However this did not
contribute to the legal recognition of Ayurveda as an independent medical
knowledge system in most parts of the world.
The second aspect of global profile of Ayurveda is the pharmaceutics, where
Ayurveda drugs are marketed and propagated as neutraceuticals, food
supplements, cosmetics and rejuvenatives. In most of the countries Ayurveda
drugs can be seen in general stores as dietary supplements under the label of
Ayurvedic Herbal products. These are not classified as drugs and hence are not
allowed to have any medicinal claim. There is also no requirement for qualified
Ayurveda physician to prescribe them. Sceptics of TM have demanded very high
standards to accept its efficacy and validity. However huge costs involved in the
research of a kind that is demanded by the global scientific community has in
effect denied success to Ayurveda and other medical knowledge systems in their
truly holistic sense.
The third aspect of global profile of Ayurveda is the promotion of Ayurveda
education which is the most recent trend observed in major part of the world.
Ayurveda is studied from different angles abroad. There is a purely academic
approach to study Ayurveda, an exercise in which medical anthropologists,

historians, philosophists and Sanskrit scholars are engaged. CAM which looks at
Ayurveda as a part of a spectrum of alternative approaches of healing but do not
consider it as an independent system of medicine. Compared to the first approach
the concept of CAM recognizes a certain amount of practical relevance for
systems of medicine like Ayurveda.
There are promoters of Ayurveda who believe in its identity as an independent
system of medicine. In this group there are a few who have a genuine
understanding of Ayurveda. These are the people who desire to promote
Ayurveda truly for the well being of the global community. There are many
institutions in Ayurveda offering Ayurveda courses to interested foreign nationals.
Many Western scholars have come to India and did a formal Ayurveda education
out of love and interest in the subject. Many modern doctors in the West also were
keen to understand Indian holistic health care system better. The main barrier in
acquiring formal Ayurveda education in India was the lack of authentic texts and
capable teachers who can convey the subject in depth in English. The time
consumed for acquiring deep knowledge of Ayurveda was unaffordable to
common Western people. Initially they had to learn Sanskrit and Hindi and then
Ayurveda which consumed good quality years of their life.
By 1988 a few institutions in India commenced short term courses for foreign
nationals which helped Ayurveda flourishing abroad. These courses are of
varying purpose and duration, ranging from three months introductory course for
Ayurveda to a full fledged BAMS course necessary to become Ayureda
physician. In the year 1992, a one year diploma course in Ayurveda was started
under the international centre for Ayurveda studies. Gujarat Ayurveda University
(GAU) started BAMS course for foreign nationals in 1999. The students from 43
countries so far have completed various Ayurveda courses from GAU alone.
There are ample evidences for showing growing interest in Ayurveda outside
India. Nearly 99 Ayurveda institutions outside India are offering various courses.
Many institutions are still looking forward to get an official MOU signed by the
university.

The reasons behind global resurgence of Ayurveda and other traditional medical
knowledge systems can be stated as follows:

Ayurveda adopted holistic approach towards health whereas conventional

modern medicine adopted reductionist approach.

Modern medicine treats the disease but Ayurveda treats the patient which
offers the detailed patient interaction and tailor-made drugs.

Ayurveda takes into consideration broader concept of health including

physical, mental and social aspects.

Ayurveda emphasizes life style modification and healthy diet rather than
excessive use of drugs.

Ayurvedic medicines are prepared by using natural resources so they are

more preferred to modern medicines which use chemicals having harmful
side effects.

The increasing frustration due to increasing materialistic approach of

modern world brings in the urgency for spiritual awareness and the
aptitude towards the three dimensional (mind-body-spirit) perspectives to
health as visualized in Ayurveda philosophy.

Increasing awareness about the adverse effects of contemporary Western

medicines and increasing realization of its inefficacy in handling most
health problems is leading people worldwide to explore some alternative
health care solutions.

Global Status of Ayurveda

Increasing popularity of traditional medicines put forward the need for the
regulation for the trade and practice of traditional medicines in many developed
countries by the end of last millennium. People with modern and scientific
approach hesitated to appreciate the medical action of traditional Ayurvedic
therapies. Eventually the practice of Ayurveda was degraded to the practice of
selected herbal remedies declared safe by local/ regional health authorities. There
was no sincere attempt to recognize the system as such in its original form.

Even after two decades of its globalization, Ayurveda is facing identity crisis in
the medical world. In spite of the increasing popularity of Ayurveda it is still
lagging behind Traditional Chinese medicine in global recognition. Ayurveda has
been wrongly parented in many countries under the shelter of Herbal Medicine
or as a Traditional medicine of empirical base or at the most as a complementary
and alternative medicine. The term Ayurveda does not appear with an
independent status anywhere in the world other than in the Indian subcontinent,
Indian material Medica has the history of a millennium. CharakSamhita has direct
reference of over 600 herbs and many herbal formulations. Many ancient travelers
who visited India from China, Far East, and Europe were impressed by the
traditional system of medicine practiced in India.
Europe imported many useful medicinal plants and their products. It shows that
Ayurveda was a system of medicine even in Europe.
Today Ayurvedic medicines are largely imported into various countries as Herbal
Medicines food supplements and cosmetics. These include single herbs,
compound herbal remedies and patented drugs which contain non-herbal
ingredients. Many of these contain Ayurveda natural minerals and metallic drugs,
which need strict medical mechanism to regulate these drugs; many a times
suspected adverse drug reactions, spoil the reputation of the system as a whole,
whereas in most of the cases the irrational use and misbranding as food are the
culprits.
Today the global estimated turnover of exports of herbal medicines is more than
Rs. 50,000crore. Of this Indias share is very negligible, coming to only Rs. 400
crore.

Current global Status of Ayurveda-A Country- wise Analysis

Among various countries where Ayurveda has popularized, the status of

Ayurveda varies widely. The trade, practice and education of Ayurveda are
prevalent in all these countries, butit has not been recognized legally as a medical
system. However, Ayurveda has established its position around the globe as a

unique health care system with a holistic solution to many complex health
hazards. The flourish of the system has to be positively channeled to benefit the
maximum people with minimum expense. Current regulatory status of Ayurveda
at global level can be assessed by classifying the countries into four groups (Patel,
n.d.:165)
India and other SAARC Countries
Theseare the countries where Ayurveda has a strong scientific base and is well
recognized as a medical system with an independent status. These countries
regularize the trade and practice of Ayurveda. The profile of Ayurveda practice in
these countries can be given as follows:
Sri Lanka
Ayurveda tradition in Sri Lanka is centuries old but the teaching institutions were
established only in thirties by the persons educated from India.
At present following teaching institutions offer Ayurveda teaching and research in
the country:

Institute of indigenous medicine (IIM), Colombo University

GampahaWickramarachchi

Ayurveda

Institute

(GWAI),

Kelonia

University

Bandarnayake Institute for research in Ayurveda, Colombo

Ayurveda drug manufacturing Corporation of Sri Lanka, Colombo

Since 1980s IIM has started awarding BAMS degree. Later, GWAI also started
awarding the degree under the Kelonia University. Many of Sri Lankan graduates
attained post-graduate degree from Jamnagar and Varanasi and the country has
highly qualified faculty for teaching Ayurveda. These institutes in Sri Lanka
follow the rules and syllabus practiced in India.
Sri Lanka has also got a highly flourishing Ayurveda tourism inflow. Many
patients from Europe visit Sri Lanka for Ayurvedic treatment.
Nepal, Bhutan

Nepal is the first country to execute a National policy on Ayurveda. Ayurveda has
a status of a medical system in Nepal. Full-fledge Ayurveda degree course of five
and half years is conducted by the Institute of Medicine in the premises of
Tribhuvan University, Kathmandu. Ayurveda is practiced widely and plays key
role in primary health care. Wide range of Ayurvedic medicines are manufactured
and used in the country India supplies the major share of Ayurvedic medicines
used in Nepal. Bhutan also recognizes Ayurveda as a medical system. India caters
to the Ayurvedic medicine requirements of Bhutan and Nepal.
Bangladesh, Pakistan
Prior to independence of India there were a few Ayurveda colleges within the
boundaries of the present Bangladesh. However after the formation of
Bangladesh,Ayurveda education and practice took a new shape. The system is
recognized officiallyand the Government has taken initiative to integrate the
Ayurveda and Unani systemsin the primary and secondary health care institutions.
A full-fledge five and half yearsdegreecourse is being conducted at the
Government Unani and Ayurveda degree college,Dhaka. Apart from this, there
are seven Ayurveda colleges in the private sector offering diploma in Ayurveda.
There are 153 BAMS registered Ayurveda doctors and 398 diploma holders
practicing in Bangladesh. There are 162 registered sales centers for the trade of
Ayurvedic medicines in the country. Pakistan has many Ayurvedic manufacturing
units and Ayurveda and Unani systems of medicines are practiced even in
Pakistan.
I.

Other Asian Countries

Ayurveda and Traditional Chinese medicines are quite popular in Asian countries.
Traditional medicines play an important role in primary health care of these
nations.
The main Asian countries using Traditional medicines are:
Japan

Research and study of Ayurveda are being carried out in Japan for the last thirty
years. The Osaka medical school has established Society of Ayurveda in Japan in
1969. Many delegations from India including contemporary Ayurveda experts
visited Japan to give boost to the popularity of Ayurveda in Japan. The Institute of
Traditional orientalmedicines in Tokyo conduct shortterm courses for health
professionals. A special course in Panchkarma is also offered to general public.
Ayurveda Institutes in Japan have translated few Ayurveda classics in Japanese
language.
DPR Korea
The traditional medicines of DPR Korea are called Koryo medicine. The whole
medical care system is government owned. The conventional doctors also have to
cover 30% of their curriculum in Koryo medicine.
Myanmar
The traditional medicine of Myanmar has its origin from Ayurveda. It uses the
raw material of herbal, mineral and animal origin. The country has a Department
of Traditional Medicine and practice of Ayurveda is officially recognized.

Thailand
Ayurveda is very popular in Thailand. AyurvedVidyalay offers a Bachelors
degree in Ayurvedic medicine.The Ayurveda Vidyalaya offers a Bachelors
degree in Ayurveda medicine. There are many Ayurveda practitioners and
Ayurveda therapy centres in the country and the medicaments are imported from
India and Sri Lanka.
II.

Developed Countries

This group includes those developed countries of America,Europe and Australia,

where Ayurveda is widely practiced as wellness therapy, with no recognition or
regulation. The drugs are sold as food supplements and cosmetics as OTC
products.
United States of America (USA)
The practice and education of Ayurveda is flourishing in many states like
California.Three types of training and education programmes in Ayurveda are
available in America.Ayurveda Institute of New Mexico offers extensive onsite
training programme for self-healing without certifying practitioner. American
Institute of Ayurveda runs Home study programme for Vedic Studies in New
Mexico, Florida Vedic College, the Massachusetts and the Ayurveda Holistic
Centre in New York offer home study plus minimal classroom training
culminating in certification as a practitioner.
The only formal and elaborate training programme in Ayurveda in America is
being offered by the California College of Ayurveda. The California college of
Ayurveda was founded in 1995. In America two associations i.e. National
Ayurveda Medical Association and California Association of Ayurveda Medicine
are trying to get recognition and accreditation for Ayurveda.
Recently many institutions and associations were formed for Aurveda training and
practices. Many graduates and postgraduates of Ayurveda in USA are trying to
establish Ayurveda teaching and treatment centres.
Canada
In Canada a Council for Ayurveda practitioners, International Council of
Ayurvedic Physicians Inc. is registered with the Government of Canada. The
main goals are to create general awareness in general public about Ayurveda
through Internet, television, newspapers, magazines, seminars, conferences etc.
They are also providing platform to upcoming Ayurveda practitioners and
immigrant Ayurvedic doctors from India. They help manufacturers and importers
of Ayurvedic medicines.

Argentina and Brazil

Ayurveda is not very popular in Argentina. There are no qualified Ayurveda
physicians in Argentina. Some progress has been made in the area of Ayurvedic
education in the recent years.Post graduate diploma courses are offered through
foundation de solud Ayurveda Prema to qualified doctors and paramedical
professionals. Nearly 300 medical professionals are qualified from the
Foundations courses and are practicing Ayurveda.
Europe and other Countries
In the European Union there had been an agreement that all countries would have
their herbal industries and products under identical medicines controls by the end
of 1992. The only major country to achieve tight control was U.K. and as a result,
most herbal products were thrown out of U.K. market. The EU has enforced the
directives for Traditional Herbal Medicines from and all drugs that use animal
products such as milk products and honey, all natural mineral drugs and
combinations of the above with herbal drugs.Nearly 70-80% Ayurveda drugs will
not be allowed in EU in the coming years and this shuts the door to the practice of
Ayurveda in its genuine form within the next decade. Most of the Ayurveda
tourists visiting India are from European countries. They travel down to India for
the treatment of a wide range of chronic disorders.

The United Kingdom

The trade and practice of Ayurveda flourished in the UK in late 80s. The three
year, Bachelor of Ayurveda course was started in U.K. in affiliation to the
Thames Valley University (TUV). The Ayurveda College UK has been trying to
start a B Sc and M Sc Course in Ayurveda in collaboration with the Middlesex
University.
The latest entrants to the Ayurveda field are the Ayurveda practitioners
Association. They are closely working with the European Herbal Practitioners
Association. The International Ayurveda Foundation has been pursuing with the

agenda of Global recognition of Ayurveda from 2002 onwards. The foundation is

working closely with the Indian government.
Germany, Austria, Switzerland, Hungary
In Germany Ayurveda along with other Vedic sciences is having good foot hold.
Ayurvedic Physicians from India regularly visit Germany to deliver lectures and
seminars. German Government has still not recognized the practice and trade of
Ayurveda.A few wellness centres are established and are doing good work in
promotion and propagation of Ayurveda in Germany. Ayurvedic products are sold
as food supplements in Germany. Only pharmacists are allowed to import
Ayurvedic medical preparations on their own responsibility and to forward them
directly to the patients.
The profession of practicing natural medicines is not legally permitted in
Austria.Training of Ayurvedicprofessionals is not acknowledged yet in Austria.
Government of lower Austria has officially declared an Ayurveda village which
will receive grant from the government to realize the master plan of this village
according to The Ayurvedic and Vastu guidelines.
In Switzerland Ayurveda is not included in the basic insurance plan. Aregulatory
Commission for alternative medicine is founded, which consists of the most
important associations of alternative medicines.This includes two Ayurveda
associations in Switzerland.
In Hungary Ayurveda has become an accepted medical system and is an
obligatory subject for a post graduate degree course since 1997.A Hungarian
establishment, Ayurveda Medical Foundation is working for the propagation of
Ayurveda in Hungary. The government is very positive towards Ayurveda and
currently 43 Ayurveda drugs have been officially approved for use in the country
and being imported from India and Sri Lanka.
The Netherlands
Graduates and postgraduates of Ayurveda visiting regularly from India have
formed a professional association called Associated Ayurveda Nederlands

Italy
There are several institutes in Italy, which impart various Ayurveda courses. The
practice of Ayurveda as a traditional and complementary therapy is wide spread.
Spain
At Barcelona and other cities of Spain, eminent Ayurvedic leaders and
Naturopaths have been involved with both education and services in alternative
systems of medicine.
France, Czech Republic, Greece
In France Ayurveda is slowly gaining popularity as a wellness therapy. Few
institutions are offering Ayurveda education. In Greece, Dr.Kostopolos is running
an Ayurveda centre. Even in Czech Republic Ayurveda courses are being
conducted and some Wellness therapy centres are opened, but Ayurveda has to
get legal recognition in thiscountry.
Australia and New Zealand
Many qualified Ayurveda practitioners from India are practicing Ayurveda in
Australia from last one decade. They import large number of Ayurvedic products
from India and Sri Lanka.In New Zealand WellparkCollege of Natural
Therapiesconduct various courses in Ayurveda, Natural therapies and Yoga. This
college is recognized by New Zealand Government.

Other Countries

All other individual countries of Africa, Latin America, and Russia have a large
clientele for Ayurveda.Large number of people from these countries travels down
to India from these countries for Ayurveda treatment for various chronic diseases.
South Africa allows the import of Ayurvedic medicines. Ayurveda practice is
recognized in South Africa.

Russian Government and public have acknowledged Ayurveda as a healing

system, but there is no legal recognition for the profession or the system as such.
One Ayurveda clinic in Moscowis opened by Vaidyas invited from India which
has generated awareness for Ayurveda. The Russian Government has recognized
Panchkarma as line of treatment throughout the country and the process for the
recognition of Kshar Sutra has also commenced. Many physicians are visiting
Russia to train their physicians in various practices of Ayurveda.
Israel
Trade and practice of Ayurveda is being popularized in Israel recently. The
system is practiced as Traditional medicines without any recognition.
Apart from these countries Ayurveda is practiced in one form or other in many
other countries like Romania, Poland and Arabian countries. The issues like
heavy metal contents and toxicity of the same have recently damaged the science
to a great extent.
6.9 Trading of Ayurveda Products Outside
In most of the countries where Ayurveda is practiced, the practitioners get their
medicines from private sources in India, with an unofficial import arrangement,
violating the law. The small scale manufacturersbring medicines from India.
Official export from India is only a small percentage compared to the trade and
consumption figures. The controversial Ayurveda medicines reported to have
heavy metal contents, are not officially exported from India since the trade of
Ayurveda medicines in most ofthese countries is done by violating local law.
Currently the global market for herbal products, which include medicines, health
supplement, beauty and toiletry products, is estimated by WHO at over US$
16billion by 2005. In Europe market for licensed herbal medicines is
approximately US $ 475 million.
Growing population in developing countries and increasing demand for natural
products increased the demand for the medicinal plants and the products derived
from them. The European market for herbal remedies accounts for 45 percent of

the global market, and stood at US $ 7.5 billion in 1997. Germany and France are
the most established markets with a share of 22 percent and 11 percent in Europe
respectively followed by Italy, UK, Spain and Holland. The Asian region also had
a significant share in global herbal remedies market, being at par with North
America at US $ 3 billion, thus accounting for 18 percent of the total share in
1997.
An opening of the global market will allow Indian manufacturers and service
providers of traditional medicines to venture into the western herbal markets.
Theacceptance of herbal products in the western market has created new
opportunities for the industry. The demand for Ayurvedic preparations is quite
high and new interest in Ayurvedic massages and cleansing treatments have
further increased the demand. Modern medicines are proved to be ineffective in
the case of emergence of the old conditions like small pox. Due to this reason
people prefer to go back to the traditional medicines which are natural in nature.
But these medicines have to go through the modern scientific methods for the
universal acceptability. The Chinese have been borrowing Ayurveda knowledge
from India since as early as the 14th century. Today China has pioneered the art of
leveraging on its traditional medicines and India is nowhere near it in terms of
global competition.
In most modern sciences India is lagging behind the developed nations by at least
a few decades, but Ayurveda is the only sector where the country is ahead of
others by 5000 years and it must leverage on its head start. Ayurvedic products
and services based on Ayurveda need to be promoted. Today the whole Ayurveda
system needs recognition and not just products. Former US president Mr. Bill
Clinton appointed afifteen member commission on complementary and alternative
medicine policy which included three Chinese doctors, but ironically, there was
no representation from Indian systems of medicines.

Indias Exports of Ayurveda Products

Ayurveda dominates the domestic market for indigenous medicines. As far as

global herbal market is concerned; European Union is the largest market for
herbalproducts having a market share of 45 percent followed by ASEAN and
Japan with 17 percent and 10 percent respectively (Exim Bank, 2005).
Indias Ayurveda exports to the world under various headings (US$ million)
Table 6.3 Growth percentage
ITC(HS)
Commodity
trade
1211
of
which
12119026
30039001
30049001
Total

19992000

200001

200102

200001

200102

44.22

78.37

78.05

77.21

40.41

4.28
8.37
25.13
77.72

4.93
21.17
27.40
126.94

6.67
19.41
31.04
128.50

15.41
152.88
9.02
63.32

35.29
-8.31
13.28
1.23

Source: DGCIS, Ministry of Commerce and Industry (as compiled by CMIE India
Trades Database) 2002
The above table shows the exports of Ayurveda products which includes the
following items:
Plants and parts of plants of a kind used primarily in perfumery, in pharmacy or
for insecticides and fungicides, fresh or dried, crushed or powdered Ayurveda and
Unani herbs- ITC (HS) code 12119026, ITC (HS) code 1211.
Ayurveda andUnani medicines (under the head-medicaments consisting of two or
more constituents which have been mixed together for therapeutic or prophylactic
uses, not put up for retail sale)-ITC (HS) Code: 30039001
Ayurveda and Unani medicines (Under the head Other medicines put up for
retail sale)-ITC (HS) Code: 30049001
Developed countries have been the traditional export markets for Ayurveda
products. However after increasing by more than 63% in 2000-01 to US $ 126.9
million, exports of Ayurveda virtually stagnated, growing by a mere 1.2% to US $
128.5 million in 2001-02. There was fall in exports to Germany from more than

US $ 8 million in 2000-01 to less than US $ 4 million in 2001-02. Other countries

with notable declines as export destinations were Russia, UK, Nepal, Indonesia
and Nigeria. This should be a cause for concern since the global herbal market is
continuously rising while Indias exports remained stagnant during 2001-02.
The top two export destinations for Ayurveda products, viz. USA and Japan have
shown a robust growth, although not as significant as in theprevious year.Overall
exports of Ayurvedic products to UK have fallen because of a sharp decline in
exports of plants and parts of plants. On the other hand, exports to Germany
declined in 2001-02 because of a notable decline in exports across the board.
Although exports of Ayurvedic products have increased by almost 3 percent in
volume terms, their growth in value terms has been only 1.2%, despite the
depreciation of the rupee vis--vis the US dollars. This clearly indicates that the
price realization of these Ayurvedic products has come down, particularly in
Middle East, Oceania and Asia. On the contrary price realization has improved
significantly for the American and East European region.
Major Export Destinations of Ayurveda Products
United States

United Kingdom
Canada

Germany

Japan

Malaysia

Australia

New Zealand

Middle East

France

Switzerland

South Africa

Russia

Major Constraints faced by Manufacturers during Exports

Lack of awareness about the system internationally

Lack of government support

Financial constraints

Documentation and registration of products required in foreign

markets

Lack of suitable associates/ agencies abroad leading to low foreign

penetration

No market information

Lack of continuous supply of raw materials

Delays in approval of formulations

Ban on several herbs for exports leading to lesser availability of

certain herbs

Lack of trained personnel in financial management in foreign trade

Lack of motivation for exports

Non-availability of modern methods to diagnose chronic diseases

Paucity of information on statutory requirements

Shortage of genuine buyers

Adherence to the specifications related to packaging

High cost of registration charges abroad

Prohibitive cost of courier services for sending samples abroad

No thorough information on the target customers

Tough verification procedures

Keeping up to the time schedule of supply

Lack of contacts

Medicines exported as food supplements

Requirement of NOC from wildlife authority

6.10 Impact of World Trade Organization on Ayurvedic Medicines

Today world has come closer so people can meet their different requirements by
consuming a large variety of goods. To make these goods available, every nation
has its independent economy governed by rules, regulations, policies and

procedures. When it is restricted to an individual country, it is decided within the

framework of its trade rules.
To facilitate the producers/ providers of goods and services, and for exporters/
importers to conduct their business trade; the World Trade Organization (WTO)
was established on 1st January 1995 in Geneva, Switzerland which received
worldwide recognition.
WTO is the only global international organization dealing with the rules of trade
between nations, some of its functions are:

Administering WTO trade agreements

Forum for trade negotiations

Handling trade disputes

Monitoring national trade policies

Technical assistance and training for developing countries

Co-operation with other international organizations

Since India is one of the members of WTO it is necessary to analyze WTOs

impact on the countrys economy to see whether it stands at the right place after
the implementation of the agreement. It is important to understand the WTOs
impact on the trade of Indian herbal products and Ayurvedic medicines.

WTO Impact on Ayurvedic Medicines

Being one of the four primary medical sciences, Ayurvedic medicines have taken
the plunge into the global pharmaceutical industry. The trade of theseAyurvedic
medicines will be affected in both the ways, positive and negative, with the
implementation of the agreement by WTO (MVIRDC, 2005)).
Positive Impact on AyurvedicMedicines
Standardization: Now various indigenous Ayurvedic medicines and their raw
constituents will be standardized according to global norms. This will bring
discipline in unorganized sector of Ayurveadic system of medicines. The

cultivation of medicinal plants, which is the most important ingredient in

Ayurvedic medicines will be regularized and controlled.
Research and Development: The change in the patent law will enforce a more
specific and diligent research and development movement in India. Patents being
the most vital aspect of the global pharma industry, more efforts will be taken to
acquire and protect Ayurvedic medicines (being originally from India) to become
established in the world market.
Negative impact on Ayurvedic Medicines
Prices:The global standing of Ayurvedic medicines will possibly increase their
prices. This will affect the consumption of these medicines in the local markets.
Technology: There will be very little or no technology transfer or foreign
investment to developing countries as multinational firms will be free to export
finished products. The raw herbs trade will increase, which will limit the value
addition. Similarly, if sustainable crop development is not carried out this rise in
demand will put severe pressure on the Indian eco system, and only the worse can
be expected.
Patent: The production of drugs will concentrate in industrialized countries.
These countries have introduced the patent only after the development of their
own industry. On the other hand, developing countries like India, acquire basic
technology mostly through reverse engineering, as only the process is patented
and not the product. The agreement will prevent such a development which can
affect the growth of pharma industry negatively in these countries.
Protection of Traditional Medicine Knowledge
The need to protect traditional medicine knowledge and the need to secure a fair
and equitable sharing of benefits derived from the use of biodiversity and
associated traditional knowledge of medicines should be recognized entirely. At
present, existing conventional patent law protection requirements are not
applicable to traditional knowledge. There is no agreement as to how and when

would be the most appropriate and effective way to achieve protection of

traditional medicine systems like Ayurveda would be available.
It is imperative that Indian herbal and Ayurveda industry should motivate itself to
make use of TRIPs agreement to ensure access to innovation and affordability of
medicines in the interest of universal health needs.
The major problems faced by traditional medicines in general and Ayurvedic
medicines in particular are the lack of standardization, adequate modernization,
quality assurance and product knowledge. These problems can be solved to some
extent by implementing Good Manufacturing Practice (GMP) Act forAyurvedic
drug industry.

6.11 Compliance of GMP Provisions by Ayurvedic Industry

Ayurvedic drug manufacturers have to review and reconfigure their systems to
adhere to the good manufacturing practice (GMP) norms. Good manufacturing
practice or GMP is part of a quality system covering the manufacturing and
testing of active pharmaceutical ingredients, diagnostics, foods, pharmaceutical
products, and medical devices (Wikipedia).GMPs are guidelines that outline the
aspects of production and testing that can impact the quality of a product. Many
countries have legislatedthat pharmaceutical and medical device companies must
follow GMP procedures, and have created their own GMP guidelines that
correspond with their legislation.
GMP guidelines are not prescriptive instructions on how to manufacture products.
They are a series of general principles that must be observed during
manufacturing. When a company is setting up its quality programme and
manufacturing process, there may be many ways it can fulfill GMP requirements.
It is the companys responsibility to determine the most effective and efficient
quality process.
GMPs are enforced in the United States by the US FDA, under Section 501(B) of
the 1938 Food, Drug, and Cosmetic Act (21 USC 351). Courts may theoretically
hold that a drug product is adulterated even if there is no specific regulatory

requirement that was violated as long as the process was not performed according
to industry standards.
The World Health Organization version of GMP is used by pharmaceutical
regulators and the pharmaceutical industry in over one hundred countries
worldwide, primarily in the developing world. The European Unions GMP (EUGMP) enforces similar requirements to WHO GMP, as does the Food and Drug
Administrations version in the US. Similar GMPs are used in other countries,
with Australia, Canada, Japan, Singapore and others having highly developed /
sophisticated GMP requirements. In the United Kingdom, the Medicines Act
(1968) covers most aspects of GMP in what is commonly referred to as The
Orange Guide which is named so because of the colour for its cover, it is
officially known as Rules and Guidance for Pharmaceutical Manufacturers and
Distributors.
Enforcement
Within the European Union, GMP inspections are performed by National
Regulatory Agencies, in the Republic of Korea by the Korea Food and Drugs
Administration, in Australia by the Therapeutically Goods Administration, in
South Africa by the Medicines Control Council, in Brazil by the AgenciaNational
de Vigilancia Sanitaria, in Iran, India and Pakistan by the ministry of health, and
by similar national organizations worldwide. Each of the inspectorates carry out
routine GMP inspections to ensure that drug products are produced safely and
correctly, additionally, many countries perform pre-approval inspections for GMP
compliance prior to the approval of a new drug for marketing.
Regulatory agencies (including the FDA in the US and regulatory agencies in
many European nations) are authorized to conduct unannounced inspections,
though some are scheduled. FDA routine domestic inspections are usually
unannounced, but must be conducted according to 704(A) of the FD and C Act
(21USC374), which requires that they are performed at a reasonable time.
GMP in Ayurveda

GMP in Ayurved is focused on the following aspects of manufacturing of

Ayurvedic medicines in Ayurvedic medicine industries (Puranik, 2004).
a) Location and surroundings

Manufacturing unit should be situated on a specious land

surrounded by botanical garden.

Raw material should be available in sufficient amount near the

place of manufacturing.

The place should always be free from outside interference that will
not distract the attention of the staff engaged in manufacturing.

b) Cleanliness and hygiene

Water suitable for cleaning instruments and to be used in medicines
should be made available near the manufacturing.
c) Cleanliness and hygiene Manufacturing staff
Working staff must be neat and clean.
Staff should be medically examined and approved by the physicians.
d) Storage of raw material
Containers suitable for different types of raw material should be used.
Sour items like tamarind should always be stored in glass bottle.
e) Storage in manufacturing unit
Different types of herbal raw materials should be stored in a place free
from dust, dampness, rain water, to maintain the material in best
condition.
f) Selection of quality herbs
Herbs should be grown at proper place and should be collected in a proper
season.
g) Manufacturing unit layout
Layout must be beautiful, free from dust, mist and excessive floating
particles
A unit should not be congested.
h) Manufacturing unit Bhattisection

Manufacturing unit should have good ventilation without disturbance of

direct wind or rain water.
i) Machinery and equipments
Various types of suitable instruments for different types of functions are
explained in Ayurvedic texts. e. g.Instruments for preparation of Asavas,
Bhasmas. Even the constructions of furnaces have been specified.
j) Manufacturing process
Quantum of water required in manufacturing must be specified. Earthen pots
should be used in manufacturing process. Proper technique of Shodhan should be
used
k) Manufacturing process-Exacting instructions
Exact amount of specific heat should be given in manufacturing process.
Specific quantity of firewood should be used.

WHO Guidelines for Herbal Industry

GMP for Herbal Products

Herbal material can be cultivated or collected from forests. It may be in powder
form, so it is essential to specify the starting activity from which GMP will be
applied.
Medicinal plantsused for the preparation of Ayurvedic medicines are susceptible
to microbial contamination so very high level of sanitation and hygiene should be
practiced in the premises. Staff engaged in manufacturing should report illness
especially tuberculosis and other communicable diseases.
Appropriate quality control/ assurance system should be used and it should cover
wide range and all aspects including toxicity.
Industry should employ adequate staff including technical staff. The staff should
be given training as per the written instructions. At least one member of the team
engaged in manufacturing must have thorough knowledge about different herbs.
Challenges of Implementing GMP

A major obstacle in implementing GMP act to the industrial units is its

requirement of 1200 square feet area per licensed unit.
Another impediment in the implementation of GMP is its requirement of
documentation knowledge.
Though GMP is necessary for maintaining quality of Ayurvedic drugs so as to
make it globally acceptablestill it is not uniformlyimplemented in all the states of
the country.
Export Opportunities and Challenges for Ayurveda
The use of natural products is on the rise throughout the world and this fact has
given boost to the demand for Ayurvedic medicines especially in the countries
like UAE and Hungary, who have recently recognized Ayurveda officially as a
medical system (Exim Bank).19This recognition of Ayurveda as a complementary
and alternative medical system is a milestone for the propagation of Ayurveda
abroad. AryaVaidyaSala, Kottakal, has already started their distribution in UAE
while NagarjunaAyurvedic Group has set up a factory investing Rs. 3.5 crores,
primarily aimed at the export of herbal medicines. The popularity of Ayurveda
can be seen from the fact that 60% of Ayurveda clientele in UAE are locals.
The experiences of Ayurveda practitioners indicate that there is a huge potential
for exports of Ayurveda products and services.If Ayurveda can be propagated in
countries that officially recognize these medical systems, then there would be
unprecedented exports of Ayurveda through medical tourism.
Strategies for creating export possibilities for Ayurveda products and services
should encompass the following:
The developed nations follow a discriminatory practice through restrictive
medical legislation for all natural medicines produced by the companies outside
Europe and North America. Hence it is imperative to identify a mechanism to
counter such restrictive practices giving due considerations to the provisions of
World Trade Organization.

Ayurveda products have to be subjected to the globally accepted processes such

as randomized double-blind controlled Clinical trials as formulated by WHO, so
as to convince importing countries to accept their efficacy and safety.
A few diseases like HIV/AIDS, cancer, hepatitis, diabetes, psoriasis, leprosy,
leukoderma and arthritis should be selected and put on the WHO protocol based
controlled clinical trials. The results should then be published in international
medical journals. If the preliminary results are confirmed and accepted then
Ayurveda medicines used in the trials would be in demand globally and the
desired increase in export of such products would be possible. Since Ayurveda
physicians are necessary to initially introduce the treatment abroad, their services
will also be exported simultaneously
The use of traditional knowledge is possible only with the co-operation and
control of traditional owners of that knowledge. This requires the encouragement
and support to be given for the development and use of collaborative agreements
safeguarding the use of traditional knowledge of biodiversity, taking into account
existing intellectual property rights, and establishing a system of royalty payments
from commercial development of the products resulting from the use of
traditional knowledge.
Ayurved as a medical system should be given a strong base of Intellectual
Property Rights in order to develop overseas markets for their products and
services.
Alternative sales techniques, especially sales via the internet need to be explored.
Systematic subject wise websites must be designed to explore the opportunities of
e-commerce.
Countries where regulations permit imports of Ayurveda products and services on
easy terms must be identified.
A vertical combination of network starting from cultivation and collection of
medicinal plants and raw drugs, drug development and business needs to be
created.
Ayurveda products and services should be included as an identified export item
and should be incorporated in the EXIM policy.

Considering the growing opportunities available for Ayurveda, a strategy can be

evolved so as to take advantage of the bright prospects that this system of
medicine has to offer. Ayurveda is gaining popularity and recognition in both
domestic as well as international market so there are greater chances of increase
in global demand for Ayurvedic products. Recently two market leaders like
Hindustan Lever Ltd. and Cipla have entered the domestic Ayurveda sector with a
range of non-prescription over the counter (OTC) products. Pharmaceutical
major, Nicholas Piramalhas enteredinto a 50:50 joint venture with CharakPharma
to form CharakPiramal Ltd. for marketing Charak OTC products. The joint
venture enabled Charak to use Nicholass nationwide distribution set up to give a
big push to its range of Ayurvedic products. Similarly Alchem Laboratories has
entered into a marketing arrangement with Cybele Herbal Laboratories to promote
herbal products. These trends clearly indicate that major players are keenly
interested in the Ayurvedic OTC business and its huge potential.
Indias exports of Ayurvedic products have been increasing consistently, as is
evident from the following table.
Table 6.4 Indias Total Exports of Ayurvedic Products
Values in Rs.Lacs
Year

Total exports

2006-07

25,953.88

2007-08

32,143.83

2008-09

32828.60

2009-10

96167.20

Source; Department of Commerce, Export Import Data Bank, Government of

India
The above table shows that Indias exports of Ayurvedic products have been
increasing at a rate more than 312.6 percent.

6.12 Conclusions
Globalization manifests itself in the promotion of free trade so it has brought
many opportunities for the developing countries like India. But at the same time it
exposed India to many threats and challenges.
Globalization benefitted the Indian healthcare system in the form of global trend
of high preference for traditional medicines having natural origin.
Today traditional medicine sector in general and Ayurveda in particular is facing
lot of problems like lack of standardization of raw material, lack of adequate
modernization and lack of adequate infrastructure.
Recent resurgence of Ayurveda across the globe is the result of continuous efforts
taken by some renowned Ayurveda practitioners to spread the knowledge about
the importance of Ayurveda in developed countries like U.S.A., Japan, Australia,
Italy and Germany. Today the promotion of Ayurveda education in different
countries of the world contributed significantly towards making Ayurveda global
in real sense.
Heavy metal controversy related to Ayurvedic medicines makes it difficult to
increase the official export of Ayurvedic medicines. Lack of government support
and lot of paper workrequired for exporting Ayurvedic medicinesaffected the
motivation for exports. Many countries insist upon Good Manufacturing Practice
(GMP) procedure to be followed by the drug manufacturers. These countries
prepare their own guidelines to suit their GMP legislation which further hampers
the export of Ayurvedic medicines fromIndia. Since Ayurveda is gaining
recognition inside and outside India, there is tremendous scope for increasing the
exports of Ayurvedic products and services, especially in the post reform period
of liberalization and globalization.Recently the exports of Ayurvedic products
increased at more than 312.6 percent. It will increase further in near future.

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