What is the PLI Scheme?
The central government created a scheme in March this year to give companies incentives on incremental sales from products manufactured in local facilities in order to stimulate domestic production and reduce import bills. Apart from enticing foreign firms to set up shop in India, the initiative also seeks to encourage domestic firms to establish or expand existing manufacturing operations.
So far, the system has been implemented for the manufacturing of mobile and allied equipment, as well as pharmaceutical ingredients and medical devices. These sectors are labour intensive and are likely, and the expectation is that they will produce new opportunities for India’s rapidly expanding employable workforce.
PLI Scheme for Bulk Drugs
- Drugs have a significant role in the country’s healthcare service. A steady supply of pharmaceuticals is required to ensure that citizens have access to cheap healthcare. Any disruption in drug delivery can have a severe negative influence on the country’s drug security.
- The Indian pharmaceutical industry is the third-largest by volume and the 14th largest by value in the world. India accounts for 3.5 per cent of total worldwide medication and medical exports.
- Nonetheless, despite these advances, India is heavily reliant on imports of some of the essential raw materials, including bulk pharmaceuticals used to make finished dosage formulations. India imports bulk pharmaceuticals mostly for economic reasons. During the fiscal year, bulk pharmaceuticals accounted for 63 per cent of total pharmaceutical imports in the country.
- A drug security committee formed by the Department of Pharmaceuticals compiled information on APIs imported into the country and identified 53 APIs for which the country is significantly reliant on imports. Annexure A contains a list of such APIs.
- The country’s drug security is predicated on our capacity to provide an uninterrupted supply of quality bulk medications, as well as our ability to ramp up production to fulfil emergency needs circumstances. Self-sufficiency in medicine manufacture is thus highly desirable.
- On March 20, 2020, the Government of India approved a scheme called “Production Linked Incentive (PLI) Scheme for Promoting Domestic Manufacturing of Critical Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) in India” with the goal of achieving self-reliance and reducing import dependence in critical APIs.
The scheme’s goal is to increase domestic manufacturing of specified KSMs, Drug Intermediates, and APIs by attracting substantial investments in the sector, reducing India’s reliance on crucial API imports.
Under the Scheme, financial incentives will be granted to chosen producers depending on sales of 41 goods. Annexure B lists these 41 goods, which cover all 53 APIs identified.
- Only makers of crucial KSMs/DIs and APIs registered in India will be eligible for assistance under the scheme.
- Eligibility is conditional on a minimum investment in greenfield projects as specified in Annexure C.
- Eligibility for the scheme has no bearing on eligibility for any other scheme and vice versa.
Application and Disbursement Process
- Any manufacturer registered in India is eligible to apply under the Scheme.
- Within the application window, an initial application must be filed that is comprehensive in all aspects.
- All qualified applications will be evaluated and considered for selection.
- The incentive will be distributed to chosen applicants who fulfil the required thresholds and whose disbursement claims are deemed to be in order.