AYUSH Herbal Medicines and Classical Formulations Facility

Project Overview

An Indian traditional medicine engineering major and a European herbal pharmaceutical processing technology partner engaged IMARC Engineering to establish a greenfield AYUSH herbal medicines and classical Ayurvedic formulations manufacturing facility at Haridwar, Uttarakhand. The project was structured against the Government of India's National AYUSH Mission (NAM) framework the centrally sponsored scheme launched in 2014 and continued by the Union Cabinet on 14 July 2021 for the FY 2021-22 to FY 2025-26 window with a financial implication of INR 4,607.30 Crore (INR 3,000 Crore Central Share and INR 1,607.30 Crore State Share), administered by the Ministry of AYUSH (the dedicated Ministry for Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy).

The scheme framework is validated by the Union Budget 2026-27 allocation of INR 4,408 Crore to the Ministry of AYUSH, including INR 1,300 Crore specifically for the National AYUSH Mission, alongside the announcement of three new All India Institutes of Ayurveda and continuing support for the WHO Global Traditional Medicine Centre at Jamnagar.

The scheme has released INR 6,40,7 Crores to States and Union Territories under the National AYUSH Mission from FY2015 to FY2026, with Uttar Pradesh, Rajasthan, and Madhya Pradesh receiving the highest state allocations. India had operationalised 12,260 functional Ayushman Arogya Mandirs (AYUSH) by 19 September 2026 against a target of 12,500, directly creating institutional procurement demand for AYUSH formulations across the national primary healthcare network.

India's AYUSH and herbal product exports reached USD 688.89 million in 2024-25 (up 6.11 percent from USD 649.2 million in 2023-24), with structural growth tailwinds from the May 2025 WHO-Ministry of AYUSH Memorandum of Understanding creating a Traditional Medicine module in the International Classification of Health Interventions (ICHI) formally recognising Ayurveda, Yoga, Siddha, and Unani globally.

The project involved establishing 36 lakh ayurvedic finished-dosage units per annum of manufacturing capacity across three product families alongside 240 tonnes per annum of standardised herbal extract production. Site infrastructure was designed for Phase 2 expansion adding Unani and Siddha product lines and a dedicated nutraceutical food supplement line for the emerging global wellness market.

Client's Challenges

The client faced several specific challenges in establishing greenfield AYUSH herbal medicines and classical formulations manufacturing in India:

• Medicinal plant supply chain integration: Structuring a resilient medicinal plant feedstock supply across the Uttarakhand Himalayan belt one of India's most biodiverse medicinal plant regions covering Ashwagandha, Shatavari, Tulsi, Giloy, Brahmi, Ashoka, Guggul, Jatamansi, and over 400 commercially traded medicinal plant species through structured arrangements with Medicinal Plant Producer Societies, National Medicinal Plants Board (NMPB)-registered growers, and Van Panchayat forest-cultivation agreements, with associated Good Agricultural and Collection Practices (GACP) verification across the supply base.
• Classical formulation Ayurvedic Pharmacopoeia compliance: Engineering the classical Ayurvedic formulation preparation infrastructure in strict compliance with the Ayurvedic Pharmacopoeia of India (API and API-S) specifications covering Kashaya (decoctions), Ghrita (medicated ghees), Taila (medicated oils), Avaleha (electuaries), Bhasma (calcined preparations), Churna (powders), Guti and Vati (tablets), and Asava-Arishta (fermented preparations) product families, each with distinct process parameters, raw material pre-treatment steps, and quality specifications.
• Schedule T Good Manufacturing Practices compliance: Achieving Schedule T Good Manufacturing Practices compliance under the Drugs and Cosmetics Act 1940 (Rule 157 for AYUSH drugs) the mandatory GMP standard for all Ayurvedic, Siddha, and Unani drug manufacturing in India covering facility layout, equipment qualification, water system validation, raw material storage, process validation, and documentation infrastructure across the manufacturing operations.
• Standardised herbal extract production: Engineering the standardised herbal extract production line capable of delivering specified marker-compound concentration consistency across the extract product family, a critical capability for the proprietary formulation portfolio where active-ingredient standardisation determines therapeutic efficacy claims and distinguishes contemporary ayurvedic products from traditional Vaidya-prepared formulations.
• Multi-market export certification: Securing WHO-GMP export qualification alongside the specific regulatory certifications required for the structured global AYUSH export markets, US FDA Dietary Supplement framework compliance, European Union Traditional Herbal Medicinal Products Directive (THMPD) registration, Japan Ministry of Health Labour and Welfare qualification, and ASEAN Traditional Medicine framework alignment, each with distinct dossier, stability data, and in-market representation requirements.
• Workforce build-up: Recruiting 240 personnel including Ayurvedic physicians pharmaceutical chemists, GMP compliance specialists, quality technicians, and skilled process operators in the Haridwar regional labour market that hosts India's largest concentration of Ayurvedic manufacturing talent alongside the surrounding Ayurveda educational ecosystem.

What We Did

• Pre-Investment and Strategic Advisory

Our feasibility study evaluated four candidate Indian locations Haridwar (Uttarakhand), Jamnagar (Gujarat), Thrissur (Kerala), and Nashik (Maharashtra) with Haridwar selected on the strength of the established Haridwar-Rishikesh Ayurvedic manufacturing cluster providing supplier and technical talent depth, the surrounding Uttarakhand Himalayan medicinal plant biodiversity providing structural feedstock supply (with the state hosting over 400 commercially traded medicinal plant species across its Garhwal and Kumaon ecological zones), established road connectivity to the Delhi-NCR distribution network and the Dehradun International Airport for export logistics, the Uttarakhand Industrial Policy incentive framework alongside the state's dedicated AYUSH policy support, access to engineering talent from IIT Roorkee and the surrounding Ayurveda educational institutions, and the civilisational significance of the Haridwar-Rishikesh belt as a globally recognised traditional wellness destination supporting brand credibility.

CapEx planning of INR 190 Crore covered the medicinal plant receiving and raw material preparation area, the standardised herbal extraction line, the classical formulation preparation area, the proprietary formulation and finished-dosage area, the quality laboratory, the effluent treatment plant, and central utilities. Financial modelling demonstrated post-tax IRR of 26.8 percent at full ramp with a 4.6-year payback.

• Engineering and Design Services

IMARC designed a 20,000 sq.m built-up facility on a 10-acre plot comprising the medicinal plant receiving and inspection area with dedicated staging for the diverse Himalayan medicinal plant feedstock, the cleaning, drying, and size-reduction area, the standardised herbal extraction line comprising solvent extraction, concentration, and spray-drying infrastructure capable of delivering specified marker-compound concentration consistency across the extract product family, the classical formulation preparation area with dedicated process trains for Kashaya decoction preparation, Ghrita and Taila medicated oil preparation, Bhasma calcination operations, Avaleha electuary preparation, and Asava-Arishta fermentation operations, the Churna powdering, Guti and Vati tablet compression, and finished-dosage filling and packaging lines, the quality laboratory covering botanical identification (microscopy and TLC fingerprinting), HPTLC marker compound quantification, heavy metal analysis, microbiological testing, and full Ayurvedic Pharmacopoeia of India specification verification infrastructure, the finished goods warehouse with environmental control for shelf-life integrity, the effluent treatment plant meeting Uttarakhand State Pollution Control Board specifications, and central utilities.

Process utility design covered 2 MW grid demand supplemented by a 0.6 MW captive rooftop solar array, Water for Pharmaceutical Use infrastructure meeting Indian Pharmacopoeia water specifications, dedicated compressed air and specialty gas supply, integrated MES for batch-level traceability aligned with Schedule T GMP documentation, and dedicated cold storage for temperature-sensitive extract and formulation inventory.

• Procurement and Supply Chain Support

We executed a multi-geography procurement programme across 36 critical vendors. Standardised herbal extraction infrastructure including solvent extraction, concentration, and spray-drying equipment was sourced from established European and Chinese specialists with documented herbal pharmaceutical industry references. Classical formulation preparation equipment covering decoction, medicated oil, calcination, electuary, and fermentation operations was sourced from a combination of Indian traditional Ayurvedic equipment specialists (reflecting the deep Indian engineering heritage in classical Ayurvedic manufacturing) alongside European pharmaceutical equipment specialists for the modern GMP-compliant finishing operations.

Tablet compression, powder filling, and packaging equipment was sourced from established European and Indian pharmaceutical packaging specialists. Quality laboratory equipment covering HPTLC, HPLC, ICP-MS for heavy metal analysis, and microbiological testing was sourced from European and US analytical equipment specialists.

Medicinal plant feedstock sourcing was structured through structured long-term arrangements with Medicinal Plant Producer Societies registered under the National Medicinal Plants Board alongside Van Panchayat forest-cultivation agreements and direct farmer sourcing across the Uttarakhand Himalayan belt building to committed feedstock supply covering the full nameplate capacity by Year-2 operations. Documented Domestic Content reached 92 percent in Year-1 operations and 96 percent in Year-2 reflecting the near-complete domestic sourcing of medicinal plant feedstock, excipients, and most process consumables alongside select imports of specialty extraction solvents and analytical reference standards.

• Project Execution and Site Management

Our turnkey project management delivered 18 months from groundbreaking to first commercial AYUSH product despatch, coordinating civil construction, mechanical and electrical erection, Water for Pharmaceutical Use system installation, Schedule T GMP-compliant hygienic process area fit-out, equipment integration, and phased commissioning across the raw material preparation, extraction, classical formulation, proprietary formulation, and quality laboratory zones.

Phased commissioning ran the medicinal plant receiving and raw material preparation area first, followed by the standardised herbal extraction line (as the critical-path bottleneck for first standardised extract availability), then the classical formulation preparation area with the first Kashaya and Churna batches completed in month 15 and the first Ghrita and Taila batches in month 16, then the proprietary formulation and finished-dosage lines with first Guti and Vati tablet batches in month 17, and finally the AYUSH Premium Mark certification campaigns across the product portfolio.

Multi-vendor coordination across European, Chinese, Indian, and US contractors required a 12-strong owner's engineering team supplemented by 5 European resident engineers from the herbal pharmaceutical processing technology partner during the standardised extraction commissioning and initial product qualification phases.

• Compliance, Quality and Sustainability

IMARC led certification readiness across Schedule T Good Manufacturing Practices under Rule 157 of the Drugs and Cosmetics Rules 1945 the mandatory GMP compliance for AYUSH drug manufacturing in India Ayurvedic Pharmacopoeia of India (API and API-S) specification compliance verification across the classical formulation portfolio, AYUSH Premium Mark certification administered by the Quality Council of India for the quality-assured product portfolio, Pharmacopoeia Commission for Indian Medicine and Homoeopathy (PCIM&H) framework alignment, WHO-GMP certification for the international export qualification pathway, US FDA Dietary Supplement framework compliance, European Union Traditional Herbal Medicinal Products Directive (THMPD) registration dossier submission, Japan Ministry of Health Labour and Welfare qualification, ASEAN Traditional Medicine framework alignment, Good Agricultural and Collection Practices (GACP) verification across the medicinal plant supply base aligned with WHO guidelines, and ISO 9001:2015, ISO 14001:2015, ISO 22000:2018, ISO 45001:2018, and ISO 50001:2018 management system certifications.

Environmental compliance covered Uttarakhand State Pollution Control Board Consent to Establish and Operate, Hazardous Waste Authorisation for solvent recovery residues and process residues, and Extended Producer Responsibility commitments for end-of-life packaging material recovery under the Plastic Waste Management Rules 2022 framework. The facility achieved IGBC Gold certification through 0.6 MW captive rooftop solar covering approximately 23 percent of facility daytime energy demand, heat recovery from extraction operations, variable-frequency drives across HVAC and process pump systems, and 20 percent lower facility energy intensity versus the Southeast Asian herbal pharmaceutical manufacturing industry benchmark.

Final Results

Operational Performance

The facility achieved mechanical completion in 18 months with first commercial AYUSH product despatch in month 19. Full 36 lakh ayurvedic finished-dosage units per annum nameplate capacity was reached at 76 percent utilisation (equivalent to approximately 27.36 lakh finished-dosage units in Year-2, comprising 9.12 lakh classical formulation units, 13.68 lakh proprietary formulation units, and 4.56 lakh personal care and nutraceutical units) alongside 182.4 tonnes of standardised herbal extract production by month 15 of operations, with sustained Ayurvedic Pharmacopoeia of India specification compliance across the product portfolio.

Schedule T Good Manufacturing Practices compliance was verified in Year-1, AYUSH Premium Mark certification was secured across the classical formulation portfolio, WHO-GMP certification was completed for the export qualification pathway, and successful supplier qualification audits were passed with three retail pharmacy chains, two hospital institutional accounts, one direct-to-consumer wellness aggregator, and three export distributors across the first operational year.

Financial Outcomes

Final CapEx of INR 180 Crore delivered 5.3 percent savings against the INR 190 Crore budget through optimised civil packaging, disciplined Indian-fabrication leverage across the structural and classical Ayurvedic process infrastructure scope, adjacency benefits from the established Haridwar Ayurvedic manufacturing ecosystem for auxiliary supplier ecosystem, coordinated multi-vendor procurement, and Uttarakhand Industrial Policy incentive framework benefits alongside the state's dedicated AYUSH policy support.

Year-2 revenue of INR 280 Crore was generated at an EBITDA margin of 17 percent, consistent with established Indian AYUSH sector reporting, supported by the structural growth tailwinds of the National AYUSH Mission institutional demand pipeline, the Ayushman Arogya Mandirs network procurement, the growing retail pharmacy and direct-to-consumer wellness demand, and the emerging global AYUSH export opportunity across the US, EU, Japan, and ASEAN markets.

Market Access

Long-term supply commitments were signed with three Indian retail pharmacy chains covering committed annual classical and proprietary formulation offtake for the pan-India pharmacy distribution network, two hospital institutional accounts covering AYUSH formulation offtake for integrated AYUSH-allopathic hospital care programmes aligned with the National AYUSH Mission's co-location strategy at Primary Health Centres and District Hospitals, one direct-to-consumer wellness aggregator covering committed offtake for the e-commerce and wellness-channel distribution serving the Indian middle-class health-conscious consumer base, and three export distributors covering AYUSH product supply to the United States dietary supplement market, the European Union traditional herbal medicinal product market, and the Southeast Asian traditional medicine market (aligning with the growing global recognition of Ayurveda reflected in the May 2025 WHO-Ministry of AYUSH MoU creating the Traditional Medicine module in the International Classification of Health Interventions).

Export share reached 22 percent of revenue by Year-2 through the emerging global AYUSH export opportunity, which is projected to grow structurally through the Ministry of AYUSH's export promotion framework and the AYUSHEXCIL-Spices Board of India coordinated global promotion.

Sustainability Impact

Our integrated design combining 0.6 MW captive rooftop solar covering approximately 23 percent of facility daytime energy demand, heat recovery from solvent extraction and spray-drying operations, variable-frequency drives across HVAC and process pump systems, and LED lighting throughout achieves 20 percent lower facility energy intensity versus the Southeast Asian herbal pharmaceutical manufacturing industry benchmark. Process water reclamation is delivered through closed-loop cooling cycles and effluent treatment plant recovery.

The medicinal plant feedstock supply base is structured on Good Agricultural and Collection Practices (GACP) principles with structured monitoring of sustainable harvesting, Van Panchayat forest-cultivation discipline avoiding over-exploitation of wild medicinal plant populations, and farmer-income support across the Uttarakhand Himalayan medicinal plant grower base delivering measurable rural livelihood uplift alongside biodiversity preservation.

Solvent recovery operations across the extraction line achieve approximately 94 percent solvent reuse, reducing environmental solvent discharge and operating cost. The facility operates end-of-life packaging material recovery partnerships under the Plastic Waste Management Rules 2022 framework.

Strategic Impact

The project established a meaningful greenfield AYUSH herbal medicines and classical Ayurvedic formulations manufacturing capability under the National AYUSH Mission framework, positioning the client across the structural Indian traditional medicine growth trajectory with the Union Budget 2026-27 record INR 4,408 Crore Ministry of AYUSH allocation, the India AYUSH and Alternative Medicine market expansion from USD 26.53 billion in 2026 to USD 36.62 billion by 2031, the USD 688.89 million AYUSH export base growing at 6-plus percent annually, the WHO-Ministry of AYUSH collaboration formally recognising Ayurveda in the International Classification of Health Interventions, the 12,260 Ayushman Arogya Mandirs institutional procurement network, and the three new All India Institutes of Ayurveda announced in the Union Budget.

Year-2 revenue of INR 280 Crore, Schedule T GMP compliance, AYUSH Premium Mark certification across the product portfolio, WHO-GMP export qualification, three retail pharmacy chain supply commitments, and the three-market export entry led the client to approve Phase 2 expansion.

IMARC Engineering's end-to-end EPCM advisory, combining classical Ayurvedic formulation engineering, standardised herbal extraction, medicinal plant supply chain design across the Uttarakhand Himalayan belt, multi-market certification pathway navigation across Schedule T GMP, AYUSH Premium Mark, WHO-GMP, US FDA, EU THMPD, Japan MHLW, and ASEAN frameworks, and disciplined multi-vendor execution enabled the client to anchor a strategically important Indian industrial asset in a sector positioned at the intersection of India's civilisational traditional medicine heritage and the accelerating global demand for authenticated, standardised herbal medicines.