"These include leading drug companies such as Pfizer, Nicholas Piramal, Alembic and Torrent," said an Indian drug industry spokesman.

He said what has made matters worse are certain government policies including price control on drugs have made these imports more attractive and consequently cost-feasible for the industry.

"Stringent price control has forced domestic companies to look for alternative sources of bulk drugs supplies from China," said industry sources.

They said companies find it cost effective to import bulk drugs and formulations, rather than manufacture them locally.

Prominent drug company Pfizer had to close down its Chandigarh, India unit due to cheaper and cost-effective imports.

Similar Nicholas Piramal is reducing the production of Vitamin A as it is unviable to sell at the fixed price by the federal government.

"Prices of 74 drugs are fixed and revised by the National Pharmaceutical Pricing Authority," said an Indian drug company official.

He said Alembic is also facing the heat from China. This company manufactures Erythromycin at its plant in central Baroda.

The official said this is all happening because the government recently had discontinued dual pricing, and instead fixed a single price for both categories of manufactures from the basic stage and those who import the intermediate.

"We may be forced to close the plant as it is now unviable, "said a senior Alembic official.