Modi Govt Unveils 3 Production Incentive Schemes Worth Rs 12,000 cr To Boost Local Manufacturing Of API, Medical Devices And Bulk Drugs

In a policy moved aimed at promoting domestic manufacturing of active pharmaceutical ingredients (API) and reduce dependence on imports, the NDA government today notified a Rs 6,940-crore production linked incentive scheme to boost domestic drug manufacturing.

The government also notified two other incentive schemes aimed at boosting domestic medical manufacturing and establishing bulk drug parks.

While Indian pharmaceutical industry is the 3rd largest in the world by volume, 14th largest in terms of value and contributes 3.5% of total drugs and medicines exported globally, India is significantly dependent on import of some of the basic raw materials, viz., bulk drugs that are used to produce the finished dosage formulations.

India imports bulk drugs largely for economic considerations. Bulk drugs accounted for 63% of the total pharmaceutical imports in the country during FY 2018-19. But the looming threat of supply chain disruption due to recent Covid-19 pandemic and border tension with China have starkly highlighted India’s vulnerability in such a critical area.

The notification released by Department of Pharmaceuticals under the Ministry of Chemicals and Fertilisers provided details of the Production Linked Incentive (PLI) Scheme aimed at promoting of domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates(DIs) and Active Pharmaceutical Ingredients (APIs) In India

Scheme For Domestic Manufacturing of Active Pharmaceutical Ingredients (APIs)

Under this scheme, around 53 active pharmaceutical ingredients (APIs) — covering 41 products — have been identified by the government, for which companies will be eligible for financial incentives, provided they set up indigenous greenfield manufacturing. The financial incentives will be provided for six years

• For fermentation based products, incentive for FY 2023-24 to FY 2026-27 would be 20%, incentive for 2027-28 would be 15% and incentive for 2028-29 would be 5%. 4.2.
• For chemical synthesis based products, incentive for FY 2022-23 to FY 2027-28 would be 10%

Scheme For Promoting Domestic Manufacturing of Medical Devices.

The government also notified a Rs.1800 crore Production Linked Incentive Scheme for Promoting Domestic Manufacturing of Medical Devices.

Noting that domestic medical devices market in India is heavily dependent on imports which contribute to more than 85% of the market, the scheme intends to boost domestic manufacturing and attract large investments.

Under the Scheme, financial incentive shall be given to selected companies at the rate of 5% of incremental sales (over Base Year) of goods manufactured in India and covered under Target segments, for a period of five (5) years i.e. from FY 2021-22 to FY 2025-26.

Support under the scheme shall be provided for a period of five (5) years i.e. from FY 2021-22 to FY 2025-26.

The manufacturers of following medical devices are eligible under the Scheme

1. Cancer care/Radiotherapy medical devices
2. Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging Devices
3. Anaesthetics & Cardio-Respiratory medical devices including Catheters of Cardio Respiratory Category & Renal Care Medical Devices
4. All Implants including implantable electronic devices like Cochlear Implants and Pacemakers

Scheme For Promoting Bulk Drug parks

The government also notified a scheme to promote bulk drug parks. For selected parks, financial assistance to the tune of 70 per cent of the project cost of common infrastructure facilities will be provided. In the case of Northeast states and hilly states (Himachal Pradesh, Uttarakhand, Union Territory of Jammu & Kashmir, and Union Territory of Ladakh), financial assistance will be 90 per cent of the project cost.

The maximum assistance under the scheme for one bulk drug park will be limited to Rs 1,000 crore. The total financial outlay of the scheme is Rs 3,000 crore.

All the schemes shall be implemented through a Project Management Agency acting as the nodal Agency