India’s phytopharmaceutical and herbal extract sector has evolved from a traditional, culturally rooted practice into a dynamic component of the global health care market. This paper analyses the sector’s historical trajectory, current market structure, export performance, regulatory environment, Research and Development (R&D) capabilities, and its contribution to India’s macroeconomic indicators. By integrating secondary data from government reports, industry surveys, trade statistics, and peer reviewed literature, the study quantifies the sector’s economic impact, identifies competitive advantages, and delineates the challenges that constrain its full integration into the international pharmaceutical landscape. The findings demonstrate that India accounts for roughly 12 % of global herbal product exports, contributes USD 5.6 billion annually to national GDP, and generates over 1.2 million direct and indirect jobs. However, issues related to standardisation, intellectual property protection, and fragmented supply chains impede the sector’s potential. The paper concludes with policy recommendations aimed at strengthening R&D, enhancing quality assurance, and fostering sustainable trade relationships, thereby positioning India as a pivotal player in the future of global phytopharmaceuticals.