EMPLOYMENT AGREEMENT OF JITENDRA N. DOSHI
 
 
                              EMPLOYMENT AGREEMENT
 
         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 30th day of
August, 2002, by and between CARACO PHARMACEUTICAL LABORATORIES LTD. (the
"Company") and JITENDRA N. DOSHI ("Employee").
 
                               W I T N E S S E T H
 
         WHEREAS, the Company employs the Employee as its Chief Operating
 Officer;
 
         WHEREAS, the parties hereto are desirous of entering into a formal
agreement of employment.
 
         NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the parties covenant and agree as follows:
 
1.       Employment. The Employee is the Chief Operating Officer of the Company.
 
 
2.       Duties. The Employee shall diligently and conscientiously devote on a
         full-time basis, his best efforts to the discharge of his duties as
         established from time to time by the Bylaws of the Company, the Board
         of Directors of the Company, the Compensation Committee, and the Chief
         Executive Officer of the Company, and shall be under the direct
         supervision of the Chief Executive Officer. Such duties shall include,
         but not be limited to, those set forth in Exhibit "A," a copy of which
         is attached hereto and is herein incorporated by reference.
 
3.       (a) Compensation. The Company shall pay the Employee a salary at a rate
         of $130,000 annually, subject to all applicable withholdings, for
         services rendered as the Chief Operating Officer. The Employee's base
         salary shall be reviewed annually, and may be adjusted based upon
         performance and other relevant factors deemed reasonable by the
         Company.
 
         (b) Other Benefits. The Employee shall be entitled to participate in
         any plan or program of employee benefits maintained by the Company for
         all employees as of the date hereof, and which may be hereafter adopted
         or modified by the Company, and which is or shall be available to the
         Employee as a result of his employment by the Company pursuant to this
         Agreement, subject to the requirements of such plans or programs. A
         list of specific benefits to which the Employee shall be entitled is
         set forth in Exhibit "B," a copy of which is attached hereto and is
         herein incorporated by reference.
 
         (c) Vacations. The Employee shall be entitled to three (3) weeks paid
         vacation each year.
 
 
4.       Term. Unless terminated earlier in accordance with Section 6 hereof, or
         renewed pursuant to Section 5 hereof, the term of this Agreement shall
         be deemed to have commenced as of January 1, 2002, and shall continue
         for a period of five (5) years thereafter, that is through December 31,
         2006.
 
5.       Renewal. This Agreement shall automatically renew for successive
         one-year periods at the end of the five (5) year term, subject,
         however, to ninety (90) days written notice of termination by either
         party
 
 
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         hereto prior to the commencement of any such renewal period. The terms
         and conditions of this Agreement shall apply during any such renewal
         period.
 
6.       Termination. Notwithstanding any provision herein to the contrary,
         during the term of this Agreement, or during any period following an
         automatic renewal under Section 5 hereof, the Company's employment of
         the Employee under this Agreement shall be terminated:
 
         (a) Upon the Employee's death.
 
         (b) Upon the Disability (as that term is defined herein) of the
         Employee. For purposes of this Agreement, the Disability of Employee
         shall mean an illness, injury, or physical or mental condition of the
         Employee occurring for a period of any ninety (90) or more days out of
         a one hundred and eighty (180) day period which results in the
         Employee's inability during such period to perform substantially all of
         his regular duties to the Company. In the event the Company and the
         Employee do not agree on whether the Employee suffered a Disability
         within the meaning of this Section 6, then the issue shall be settled
         by binding arbitration under the rules and regulations of the American
         Arbitration Association, and the decision or award of the arbitrator or
         arbitrators in such arbitration shall be final, conclusive and binding
         upon the parties thereto and judgment may be entered thereon in any
         court of competent jurisdiction.
 
         (c) By the Company for "just cause" (as that term is defined herein) or
         without cause. For purposes of this Agreement, "just cause" shall mean
         dishonesty, or refusal or failure to faithfully or diligently perform
         the Employee's duties contemplated by this Agreement, including but not
         limited to the failure by the Employee to adhere to the policies of the
         Board.
 
         (d) By the Employee for "cause" not attributable to the Employee, or
         without cause. For purposes of this Agreement for "cause" not
         attributable to Employee shall mean the Company failing to make any
         payment of base salary to the Employee within thirty (30) days after
         such payment is due.
 
         (e) Employee shall receive the compensation described below in full
         settlement of the termination of his employment with the Company:
 
             (i) In the event of the death or Disability of Employee or if the
             Company terminates the Employee for "just cause," the Employee
             shall be entitled to the base salary and benefits earned by him
             prior to the date of death, Disability or termination.
 
             (ii) In the event that the Company terminates the Employee without
             cause, the Employee shall receive a severance package as follows:
 
                      (1) The Employee shall receive monthly base salary
                      payments for six (6) months from the date of termination;
 
                      (2) The Company shall continue premium coverage payments
                      for health insurance for six (6) months from the date of
                      death, Disability or termination;
 
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<PAGE>
 
                      (3) Any stock options that would become available for
                      exercise at the end of the year during which such death,
                      Disability or termination occurred shall vest;
 
                  (iii) In the event the Employee terminates this Agreement for
                  cause not attributable to the Employee, the Employee shall
                  receive a severance package as follows:
 
                           (1) The Employee shall receive monthly base salary
                           payments for six (6) months from the date of
                           termination;
 
                           (2) The Company shall continue premium coverage
                           payments for health insurance for six (6) months from
                           the date of termination;
 
                           (3) Any stock options that would become available for
                           exercise at the end of the year during which such
                           termination occurred shall vest.
 
                  (iv) In the event that the Employee terminates this Agreement
                  without cause, the Employee shall be entitled to the base
                  salary and benefits earned by him prior to the date of
                  termination.
 
7.       Confidentiality. At all times, Employee shall keep secret and inviolate
         and shall not divulge, communicate, use to the detriment of the Company
         or for the benefit of any other person or persons or misuse in any way
         any knowledge or secrets, tax records, personnel histories, sales
         information, computer programs, assets, accounts, books, records,
         customers, operations, personnel and contracts of the Company which
         Employee may or hereafter come to know as a result of Employee's
         association with or which is unique to the Company ("Confidential
         Information"). Employee may disclose Confidential Information if
         required by any judicial or governmental request, requirement or order;
         provided that Employee will take reasonable steps to give the Company
         sufficient prior notice to contest such request, requirement or order.
         The provisions of this Paragraph 7 shall survive the termination of
         this Agreement and Employee's employment with the Company.
 
8.       Waiver. Failure by either party to insist upon strict compliance with
         any of the terms, covenants, or conditions hereof shall not be deemed a
         waiver by that party of any such term, covenant or condition, nor shall
         any waiver or relinquishment of any right or power hereunder at any one
         or more times be deemed a waiver or relinquishment of any such right or
         power at any other time or times.
 
9.       Severability. The invalidity or unenforceability of any provision
         hereof shall in no way affect the validity or enforceability of any
         other provision.
 
10.      Nontransferability. Neither the Employee, nor his heirs, assigns or
         estate shall have the right to assign, encumber or dispose of any
         payment or right hereunder, which payment and right is expressly
         declared nonassignable and nontransferable except as otherwise
         specifically provided herein.
 
11.      Successors and Assigns. The Company and the Employee bind themselves,
         and their respective partners, successors, permitted assigns, heirs and
         legal representatives to all of the terms and conditions of this
         Agreement.
 
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<PAGE>
 
 
12.      Assignment. This Agreement, and any or all rights hereunder, may not be
         assigned, in whole or in part, by the Employee. The Company may assign
         this Agreement, in whole or in part, and any or all of its rights
         hereunder.
 
13.      Notices.
 
         (a) Every notice or other communication required or permitted to be
         given under this Agreement ("Notice") shall be in writing and shall be
         given by registered or certified mail, postage prepaid, return receipt
         requested, or by delivery of such Notice personally or by causing such
         Notice to be delivered next day delivery by reputable air courier. All
         such Notices shall be mailed or delivered to the Parties at the
         following addresses:
 
                  If to Company:    CARACO PHARMACEUTICAL LABORATORIES LTD
                                    Board of Directors
                                    1150 Elijah McCoy Drive
                                    Detroit, Michigan 48202
 
                  If to Employee:   Jitendra N. Doshi
                                    524 Fox Hills Dr. S.
                                    Bloomfield Hills, MI 48304
 
         or other such addresses as the Parties may from time to time designate
         by written notice. Delivery under this Paragraph 13, when by mail,
         shall be effective as of the date upon which the return receipt is
         accepted or refused. A Notice personally delivered under this Section
         13 shall be effective upon such delivery or, if delivery is refused,
         upon such refusal. A Notice delivered next day delivery by reputable
         air courier shall be effective upon the next business day after having
         been sent.
 
14.      Entire Agreement. The foregoing provisions contain the entire agreement
         of the parties hereto, and no modification hereof shall be binding upon
         the parties unless the same is in writing and signed by the respective
         parties hereto.
 
15.      Applicable Law. This Agreement shall be governed by, and construed in
         accordance with, the laws of the State of Michigan.
 
16.      Counterparts. This Agreement may be executed in any number of
         counterparts, each of which when so executed and delivered shall be an
         original, but such counterparts together shall constitute one
         instrument.
 
 
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<PAGE>
 
 
 
         IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement on the date first above written.
 
                             CARACO PHARMACEUTICAL LABORATORIES LTD.
                             a Michigan corporation
 
 
                             By:      /s/ Narendra N. Borkar
                                      ------------------------------------------
                                      Narendra N. Borkar
                                      Chief Executive Officer
 
                             EMPLOYEE
 
 
                             By:      /s/Jitendra N. Doshi
                                      ------------------------------------------
                                      Jitendra N. Doshi
 
 
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<PAGE>
 
 
                                   EXHIBIT "A"
 
1.   Job Title:        Chief Operating Officer
 
2.   Major Goals and Responsibilities
 
-    Assists in developing the basic objectives, policies and operating plans of
     the Company's business under the direction of the Chief Executive Officer.
-    Under the direction of the Chief Executive Officer, prepares adequate plans
     for the future development and growth of the Company's business.
-    Under the direction of the Chief Executive Officer, analyzes operating
     results of the Company and its principal components relative to established
     objectives and makes recommendations of appropriate steps to correct
     unsatisfactory conditions.
-    Under the direction of the Chief Executive Officer, assists in developing
     working capital requirements, and determining financing needs of the
     Company.
 
3.   Reports to:       Chief Executive Officer
 
4.   People Managed:   See the attached organizational chart
 
5.   Position within the Organizational Structure:  Member of management under
                                                    the Chief Executive Officer
 
6.   Primary Contact:  Chief Executive Officer
 
 
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<PAGE>
 
 
                                   EXHIBIT "B"
 
1.       Health Insurance
 
         Health insurance with family coverage consistent with the health
         insurance provided other executives of the Company.
 
2.       Car Allowance
 
         A Company car will be provided to the Employee, the value of which
         shall not exceed $380.00 per month.
 
 
 
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