India's Prime Minister Narendra Modi (L) attends a meeting with US President Donald Trump during the G20 Osaka Summit in Osaka on June 28, 2019.

India, the world's main supplier of generic drugs, said on Tuesday it will allow limited exports of the anti-malaria drug hydroxychloroquine that U.S. President Donald Trump has touted as a potential weapon in the fight against the coronavirus.

The Indian government had put a hold on exports of hydroxychloroquine as well as on the pain reliever, paracetamol, saying stocks were depleting because of the hit to global supply chains after the coronavirus emerged in China late last year.

But Trump spoke to Prime Minister Narendra Modi over the weekend seeking supplies and on Monday said India may face retaliation if it didn't withdraw the ban on exports.

India's neighbours, including Nepal, have also sought the anti-malaria drug.

"It has been decided that India would licence paracetamol and HCQ in appropriate quantities to all our neighbouring countries who are dependent on our capabilities," said Indian foreign ministry spokesman Anurag Srivastava.

"We will also be supplying these essential drugs to some nations who have been particularly badly affected by the pandemic," he said.