<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2010-12-05</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000887708</issuerCik>
        <issuerName>CARACO PHARMACEUTICAL LABORATORIES LTD</issuerName>
        <issuerTradingSymbol>CPD</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001197089</rptOwnerCik>
            <rptOwnerName>SUN PHARMACEUTICAL INDUSTRIES LTD</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>17/B MAHAL INDUSTRIAL ESTATE</rptOwnerStreet1>
            <rptOwnerStreet2>MAHAKALI CAVES ROAD</rptOwnerStreet2>
            <rptOwnerCity>ADHERI (EAST) MUMBAI</rptOwnerCity>
            <rptOwnerState>K7</rptOwnerState>
            <rptOwnerZipCode>400 093</rptOwnerZipCode>
            <rptOwnerStateDescription>INDIA</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle></officerTitle>
            <otherText></otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001249644</rptOwnerCik>
            <rptOwnerName>SHANGHVI DILIP S</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>C/O SUN PHARMACEUTICAL INDUSTRIES LTD,</rptOwnerStreet1>
            <rptOwnerStreet2>17/B INDUSTRIAL ESTATE,MAHAKALI CAVES RD</rptOwnerStreet2>
            <rptOwnerCity>ANDHERI (EAST), MUMBIA</rptOwnerCity>
            <rptOwnerState>K7</rptOwnerState>
            <rptOwnerZipCode>400 093</rptOwnerZipCode>
            <rptOwnerStateDescription>INDIA</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>1</isOther>
            <officerTitle></officerTitle>
            <otherText>(Non-Executive) Chairman</otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001197088</rptOwnerCik>
            <rptOwnerName>SUN PHARMA GLOBAL INC</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>INTERNATIONAL TRUST BUILDING,</rptOwnerStreet1>
            <rptOwnerStreet2>P. O. BOX 659, ROAD TOWN</rptOwnerStreet2>
            <rptOwnerCity>TORTOLA</rptOwnerCity>
            <rptOwnerState>D8</rptOwnerState>
            <rptOwnerZipCode>00000</rptOwnerZipCode>
            <rptOwnerStateDescription>VIRGIN ISLANDS, BRITISH</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle></officerTitle>
            <otherText></otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2010-12-05</value>
            </transactionDate>
            <deemedExecutionDate></deemedExecutionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>C</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>544000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F1"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>22086014</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See Footnote</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
        <nonDerivativeHolding>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>8382666</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                    <footnoteId id="F3"/>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeHolding>
    </nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Series B.  Preferred Stock</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
                <footnoteId id="F1"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-12-05</value>
            </transactionDate>
            <deemedExecutionDate></deemedExecutionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>C</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>544000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <value>2010-12-05</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>544000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>0</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See Footnote</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">The Series B preferred shares converted into Common Stock on a one-to-one basis and had no expiration date.</footnote>
        <footnote id="F2">These shares are owned directly by Sun Global, Inc., which is a wholly-owned subsidiary of Sun Pharmaceutical Industries Limited (&quot;Sun&quot;).  Dilip S. Shanghvi is the controlling shareholder of Sun.  Sun and Mr. Shanghvi disclaim beneficial ownership of the reported shares except to the extent of their respective pecuniary interests therein.</footnote>
        <footnote id="F3">These shares are owned directly by Sun.  Dilip S. Shanghvi is the controlling shareholder of Sun.  Mr. Shanghvi disclaims beneficial ownership of the reported shares except to the extent of his pecuniary interest therein.</footnote>
    </footnotes>

    <remarks></remarks>

    <ownerSignature>
        <signatureName>/s/ Dilip S. Shanghvi, Chairman and Managing Director</signatureName>
        <signatureDate>2010-12-07</signatureDate>
    </ownerSignature>

    <ownerSignature>
        <signatureName>/s/ Harin Mehta, Director</signatureName>
        <signatureDate>2010-12-07</signatureDate>
    </ownerSignature>

    <ownerSignature>
        <signatureName>/s/ Dilip S. Shanghvi</signatureName>
        <signatureDate>2010-12-07</signatureDate>
    </ownerSignature>
</ownershipDocument>
