<?xml version="1.0"?><ownershipDocument><schemaVersion>X0201</schemaVersion>    <documentType>4</documentType><periodOfReport>2003-08-04</periodOfReport><notSubjectToSection16>0</notSubjectToSection16><issuer><issuerCik>0000887708</issuerCik><issuerName>CARACO PHARMACEUTICAL LABORATORIES LTD</issuerName>        <issuerTradingSymbol>CARA</issuerTradingSymbol></issuer><reportingOwner><reportingOwnerId><rptOwnerCik>0000941390</rptOwnerCik><rptOwnerName>HAGELSTEIN DAVID A</rptOwnerName></reportingOwnerId><reportingOwnerAddress><rptOwnerStreet1></rptOwnerStreet1><rptOwnerStreet2>SUITE 313</rptOwnerStreet2><rptOwnerCity>BIRMINGHAM</rptOwnerCity><rptOwnerState>MI</rptOwnerState><rptOwnerZipCode>48009</rptOwnerZipCode><rptOwnerStateDescription></rptOwnerStateDescription></reportingOwnerAddress><reportingOwnerRelationship><isDirector>1</isDirector><isOfficer>0</isOfficer><isTenPercentOwner>0</isTenPercentOwner><isOther>0</isOther></reportingOwnerRelationship></reportingOwner><nonDerivativeTable><nonDerivativeTransaction><securityTitle><value>Common Stock</value></securityTitle><transactionDate><value>2003-08-04</value></transactionDate><transactionCoding><transactionFormType>4</transactionFormType><transactionCode>S</transactionCode><equitySwapInvolved>0</equitySwapInvolved></transactionCoding><transactionAmounts><transactionShares><value>20000</value></transactionShares><transactionPricePerShare><value>10.9442</value></transactionPricePerShare><transactionAcquiredDisposedCode><value>D</value></transactionAcquiredDisposedCode></transactionAmounts><postTransactionAmounts><sharesOwnedFollowingTransaction><value>1668249</value></sharesOwnedFollowingTransaction></postTransactionAmounts><ownershipNature><directOrIndirectOwnership><value>I</value></directOrIndirectOwnership><natureOfOwnership><value>Trust</value></natureOfOwnership></ownershipNature></nonDerivativeTransaction></nonDerivativeTable><ownerSignature><signatureName>/s/Jennifer Evans, Power of Attorney</signatureName><signatureDate>2003-08-05</signatureDate></ownerSignature></ownershipDocument>

