India | Cabinet approves PLI Scheme for Pharmaceuticals

The Ministry of Chemicals and Fertilizers have notified Production Linked Incentive Scheme (PLI) for Pharmaceuticals on 3rd March, 2021[1].

Indian pharmaceutical industry is the 3rd largest in the world by volume and is USD 40 billion in terms of value. The country contributes 3.5% of total drugs and medicines exported globally. The objective of the scheme is to increase the investment and production in the pharma sector to boost India’s manufacturing capabilities and contribution to product diversification to high value goods in the pharmaceutical sector.

PLI Scheme: Key features

  1. GMR based groups: In order to ensure wider applicability of the scheme, the manufacturers of pharmaceutical goods registered in India will be grouped based on their Global Manufacturing Revenue (GMR) across the pharmaceutical industry. The Scheme divides the applicants into three groups– manufacturers having Global Manufacturing Revenue in FY 2019-20 above INR 5000 crore, between INR 500 crore and INR 5000 crore and those with such revenue less than INR 500 crore.
  1. Incentives: The total quantum of incentive under the scheme is about Rs 15,000 crore and FY 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods. The larger part of incentive, INR 11000 Crore shall go to Group A (GMR above INR 5000 Cr.). The Group B and Group C have been allocated with INR 2250 Cr. and INR 1750 Cr.
  1. Categories of goods: The Pharmaceutical goods have been divided under three categories. Category 1 will include bio-pharmaceuticals; complex generic drugs; patented drugs or drugs nearing patent expiry; cell based or gene therapy drugs; orphan drugs; special empty capsules like HPMC, Pullulan, enteric etc.; complex excipients; Phyto-pharmaceuticals and other drugs as approved, category 2 will have active pharmaceutical ingredients/key starting materials/drug intermediates. Category-3 will cover drugs not covered under previous categories and also drug manufactured outside India.
  1. Rate of incentives: The rate of incentive on incremental sales of pharmaceutical goods covered under Category 1 & 2 will be 10% for FY 2022-23 to FY 2025-26, 8% for 2026-27 and 6% for 2027-28. The rate of incentive on incremental sales for pharmaceutical goods covered under Category-3 will be 5% for FY 2022-23 to FY 2025-26, 4% for 2026-27 and 3% for 2027-28.
  1. Eligibility: The Scheme states that the applicants will be selected based on pre-defined objective criteria to assess their experience, capacity to grow in scale and innovate. The selected participants in the scheme will be eligible for incentives on incremental sales of pharmaceutical goods based on yearly threshold criteria of minimum cumulative investment and minimum percentage growth in sales as mentioned in the table of the Notification.
  1. Tenure: The duration of the scheme will be from FY 2020-21 to FY 2028-29. This will include the period for processing of applications (FY2020-21), optional gestation period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.
  1. Empowered Group of Secretaries (EGoS): The Empowered Group of Secretaries (EGoS) comprising of Cabinet Secretary (Chairperson), CEO NITI Aayog (Member), Secretary DPIIT (Member Convenor), Secretary DoC (Member), Secretary DoR (Member), Secretary DEA (Member) and Secretary DoP shall undertake periodic review of the outgo under the scheme, ensure uniformity with other PLI schemes and take appropriate action to ensure that the expenditure is within the prescribed outlay.
  1. Technical Committee: A Technical Committee of 5-7 members will be formed with representative from CDSCO, experts from industry and academia. The role of the TC along with the scope and manner of its functioning shall be laid down in the scheme guidelines.
  1. Project Management Agency: The Scheme shall be implemented by the Department of Pharmaceuticals through a Project Management Agency (PMA) that will be responsible for providing secretarial, managerial and implementation support and carry out other responsibilities as assigned by DoP within the framework of scheme and guidelines thereof.
  1. Approval and Disbursement Process as listed in the scheme:
  • Application under the Scheme can be made by any manufacturer registered in India.
  • A complete application will have to be submitted before the due date. Acknowledgement will be issued after initial scrutiny of the application.
  • The applicants will be appraised and considered for approval, based on predefined selection criteria.
  • The incentives shall be released to the selected participants under the scheme who meet the annual threshold criteria of minimum cumulative investment and minimum growth in sales and if disbursement claims are found to be in order.
  • Timely disbursal of incentives by the project Management Agency will be monitored by DoP and reviewed by the EGoS.
  • The incentive will be disbursed on incremental sales for a maximum period of 6 years for each participant.
  • The progress in approval of applications and disbursal of incentive shall be monitored on an ongoing basis against the monitoring framework to be specified in the guideline.

 

*Tanvi Singh, Editorial Assistant has put this story together.

[1] Production Linked Incentive Scheme (PLI) for Pharmaceuticals, Notification No. 31026/60/2020-Policy-DoP

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