Production Linked Incentive scheme for the pharmaceutical sector is Govt of India’s initiative to boost domestic production of bulk drugs API which are currently imported from China in a very large amount.
The main motive of the scheme was to promote the production of bulk drugs at home to minimize the dependence on China for pharmaceutical raw materials. In the pharmaceutical formulation sector, India is in a comfortable position, but the pharma bulk drugs sector is still far behind as per the requirement of bulk drugs for the formulation industry.
Also, Read Best cough syrup names in India.
Pharma PLI scheme: 29 companies
A production-linked Incentive scheme was launched last year in July 2020 to meet the requirements of the country. According to CNBC TV18 total of 29 companies have been signed for the PLI scheme and many more are in the queue.
These three main schemes are associated with the whole Production Linked Incentive scheme for the pharmaceutical and healthcare industries.
- Medical Device Parks
- Bulk Drug Manufacturing Parks
- APIs/KSMs and drug intermediaries.
4 major states are applied to the Pharmaceutical Department for providing land and other facilities for setting up Medical Devices Park. These states are Chhattisgarh, Uttrakhand, J&K and Tamil Nadu.
For setting up Bulk drug manufacturing Parks states applied for are Karnataka, Tamil Nadu, And Rajasthan, These states sought for time to apply for the schemes offered by Govt of India. The last date to apply for the PLI Bulk drugs and API was November 27, 2020.
However, the last date to apply for Medical Device & Bulk drug Parks is October 15, 2020.
Main features of the Scheme For Domestic Manufacturing of Active Pharmaceutical Ingredients (APIs)
India is badly dependent on China in the field of Bulk drugs ( Raw material for pharma), in the time of Covid Indian Pharmaceutical formulation industry faced a crunch of shortage of APIs which were imported from China for decades. Then the Govt of India took the initiative to boost production of bulk drugs/ API at home.
According to the Production Linked Incentive Scheme For Domestic Manufacturing of Active Pharmaceutical Ingredients (APIs) total of 53 active pharmaceutical ingredients (APIs) have been identified for the eligible to get production Linked Incentive from Govt of India.
These 53 active ingredient (APIs) will be the raw materials for 41 pharmaceutical products (medicines).
Companies that will manufacture above said 53 bulk drug will be eligible to get financial incentives for next 6 years from the date of starting the operation.
The financial incentives for the fermentation-based product will be, for FY 2023-24 to FY 2026-27 will be 20 percent of the production value.
The incentive for FY 2027-28 would be 15 percent, and for FY 2028-29 will be 5 percent.
For chemical synthesis based products, the incentive for FY 2022-23 to FY 2027-28 would be 10 percent.-CNBC-TV18
Govt of India will provide 70 percent of the initial cost of setting the Bulk drug manufacturing park for all states, but in case of hilly states, the contribution will be up to 90 percent by Central Govt. Maximum amount for one bulk drug park will be Rs. 1000 crore, total outlays of the scheme is Rs. 3000 crore.
What is the Scheme For Promoting the Domestic Manufacturing of Medical Devices
To boost the production of medical devices Govt. of India has notified Rs. 1800 Cr. for promoting Production Linked Incentive Scheme for domestic manufacturing of medical devices. Now India is importing 85% of its total demand. This sector has very big potential for generating jobs and revenue.
According to this scheme, the financial incentives 5 percent will be given at the incremental sales, the eligibility will be for five years from FY 2021-22 to 2025-26.
Under the Scheme following medical device manufacturers of are eligible:
- Cancer care/Radiotherapy medical devices.
- Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging Devices.
- Anesthetics & Cardio-Respiratory medical devices including Catheters of Cardio-Respiratory Category & Renal Care Medical Devices.
- All Implants including implantable electronic devices like Cochlear Implants and Pacemakers.
The first set of 5 pharma projects has been Approved:
The government of India has approved the first set of five pharma projects for bulk drugs and APIs, worth a total committed investment of ₹3,761 crores, under the Production Linked Incentive scheme (PLI Scheme) for promoting domestic manufacture of bulk drugs and active pharmaceutical ingredients (APIs).-Businessline.
Earlier in 2020, the Ministry of Chemicals and Fertilisers had called for applications for manufacturing 36 APIs and bulk drugs. In 36 applications mainly focus was on four target segments under the PLI scheme. The total incentives earmarked for the PLI bulk drugs scheme was ₹6,940 crore.
The following companies successfully obtained the License to set up manufacturing facilities.
Applicant Eligible productCommitted Production capacity(tonne)Committed investment (Cr)Aurbindo PharmaPenicillin-G150001392Karnataka Antibiotics & Pharmaceuticals7-ACA1000275Aurbindo Pharma7-ACA2000813Aurbindo PharmaErythromycin Thiocyanate (TIOC)1600834Kinvat Pvt LtdClavulanic Acid300447.17company-list
Production Linked Incentive Scheme
Under a rough idea total of 53 bulk drugs are eligible for a PLI worth Rs 6,940 crore. The PLI scheme will benefit up to 136 manufacturing units, and 136 units can generate incremental sales of Rs 46,400 crore. That would be a significant additional employment generation over the next eight years in these upcoming bulk drug parks.
PLI Scheme India.
India faced a huge shortage of bulk drugs (Raw material for pharma) during the COVID-19 time, then Govt of India decided to boost the domestic production of Bulk drugs/APIs, Medical devices, and Bulk drug intermediates for the pharmaceuticals Industry. To encourage domestic production of these items, the Govt of India announced some incentives that were related to the production of prescribed 53 bulk drugs which are heavily imported from China, and medical devices related to particular segments of healthcare like cancer-related devices.
Govt of India announces incentives on incremental sales from products manufactured in domestic companies. The scheme is for local and foreign companies to set up units in India and do operations here.
Also Read: Pharma Top 10 companies in India.
Production Linked Incentive Scheme for Pharma
Production Linked Incentive Scheme for Pharma was announced in July 2020, to boost the domestic production of several bulk drugs that are imported from China now, and these bulk drugs compound 65 percent of total APIs imported. The Government promised many attractive benefits to Production Linked Incentives that are a maximum of 20 percent to 5 percent for certain types of categories. The production-linked incentives would be given for the next 6 years from the start of production of the stipulated drugs and medical devices.
Cabinet approves PLI Scheme to 10 key Sectors for Enhancing India’s Manufacturing Capabilities
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in the following 10 key sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
In this cabinet meeting several sectors were included in the core sector of the PLI scheme for Pharmaceuticals announced in July 2020.
New sectors included are Advance Chemistry Cell (ACC) Battery, Electronic, Automobiles and Auto components, Pharmaceutical drugs, Telecom sector, Textiles products, Food Products, High Efficiency Solar VP modules, White Goods, Speciality steels, etc.
According to the Cabinet decision “The PLI scheme will be implemented by the concerned ministries/departments and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet. Savings, if any, from one PLI scheme of an approved sector can be utilized to fund that of another approved sector by the Empowered Group of Secretaries. Any new sector for PLI will require fresh approval of the Cabinet. “
Scheme for development of the pharmaceutical industry.
Indian Pharmaceutical industry is one of the top contributors in the basket of exports from India. Indian Pharmaceutical Industry is the biggest manufacturer of generic medicines and the top generic medicine supplier to the US and Britain. The Government understands the importance of the pharmaceutical Industry so in July 2020, the Government announced a production-linked incentive scheme. In this Scheme pharmaceutical companies, manufacturers of 53 specified bulk drugs are entitled to receive incentives from the Government for the next 6 years on the incremental sales.
The incentives on the sales will start from 20% from FY 2023-24 TO 2026-27, and 15 percent for FY 2027-28, and 5 percent for FY 2028-29.
The government also provided initial infrastructure aid up to Rs. 1000 crore for each Bulk Drug park settled in the individual state.
Bulk Drugs eligible under this Scheme:
The four segments into which the eligible KSMs/DIs/APIs products have been divided based on their criticality and import dependence namely:
- Key Fermentation based KSMs/DIs
- Niche Fermentation based KSMs/DIs/APIs
- Key Chemical Synthesis based KSMs/DIs
- Other Chemical Synthesis based KSMs/DIs/APIs
See the detailed list of eligible products.
eligible-products
Eligibility
The project shall be a greenfield project as defined under these guidelines.
The Net Worth of the Applicant (including that of Group Companies), as on the date of application, shall not be less than 30% of the total committed investment. The Applicant not meeting the said Net Worth criteria shall not be eligible.
The proposed Domestic Value Addition (DVA) by the applicant shall be at least 90% in the case of fermentation-based products and at least 70% in the case of chemical synthesis-based products.
The applicant should not have been declared as a bankrupt or wilful defaulter or defaulter or reported as fraud by any bank financial institution or non-banking financial company.
For a further, comprehensive list of eligibility criteria, see here
eligibility-for-pli-scheme
Eligibility for incentive
The project shall be a greenfield project as defined under these guidelines.
The Net Worth of the Applicant (including that of Group Companies), as on the date of application, shall not be less than 30% of the total committed investment. The Applicant not meeting the said Net Worth criteria shall not be eligible.
The proposed Domestic Value Addition (DVA) by the applicant shall be at least 90% in case of fermentation-based product and at least 70% in case of chemical synthesis based product.
References:
- Schemes for Pharmaceuticals Manufacturing- Invest India
- Pharma PLI scheme- CNBC-TV18
- The first set of five bulk drugs, pharma input projects under the PLI scheme cleared-Businessline.
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