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

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2008-09-15</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>ANDHERI (EAST) MUMBAI</rptOwnerCity>
            <rptOwnerState>K7</rptOwnerState>
            <rptOwnerZipCode></rptOwnerZipCode>
            <rptOwnerStateDescription>INDIA</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
        </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></rptOwnerZipCode>
            <rptOwnerStateDescription>VIRGIN ISLANDS, BRITISH</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001249644</rptOwnerCik>
            <rptOwnerName>SHANGHVI DILIP S</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>17/B MAHAL INDUSTRIAL ESTATE</rptOwnerStreet1>
            <rptOwnerStreet2>MAHAKALI CAVES ROAD</rptOwnerStreet2>
            <rptOwnerCity>ANDHERI (EAST), MUMBIA</rptOwnerCity>
            <rptOwnerState>K7</rptOwnerState>
            <rptOwnerZipCode></rptOwnerZipCode>
            <rptOwnerStateDescription>INDIA</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>(Non-Executive) Chairman</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2008-09-15</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>C</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>1632000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F1"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>16646014</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>2008-09-15</value>
            </transactionDate>
            <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>2008-07-11</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>544000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>6528000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See footnote</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </derivativeTransaction>
        <derivativeTransaction>
            <securityTitle>
                <value>Series B.  Preferred Stock</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
                <footnoteId id="F1"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2008-09-15</value>
            </transactionDate>
            <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>2008-07-14</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>544000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>5984000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See footnote</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </derivativeTransaction>
        <derivativeTransaction>
            <securityTitle>
                <value>Series B.  Preferred Stock</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
                <footnoteId id="F1"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2008-09-15</value>
            </transactionDate>
            <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>2008-08-25</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>544000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>5440000</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 Pharma 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>

    <ownerSignature>
        <signatureName>/s/ Dilip S. Shanghvi, Sun Pharmaceutical Industries Limited, Dilip S. Shanghvi, Chaiman and Managing Director</signatureName>
        <signatureDate>2008-09-16</signatureDate>
    </ownerSignature>

    <ownerSignature>
        <signatureName>/s/ Harin Mehta, Sun Pharma Global, Inc., Harin Mehta, Managing Director</signatureName>
        <signatureDate>2008-09-16</signatureDate>
    </ownerSignature>

    <ownerSignature>
        <signatureName>/s/ Dilip S. Shanghvi</signatureName>
        <signatureDate>2008-09-16</signatureDate>
    </ownerSignature>
</ownershipDocument>
