Cabinet
approves Production Linked Incentive Scheme for Pharmaceuticals
Posted On: 24 FEB 2021 3:46PM by PIB Delhi
The Union Cabinet,
chaired by the Prime Minister, Shri Narendra Modi has approved Production
Linked Incentive (PLI) Scheme for Pharmaceuticals over a period of Financial
Year 2020-21 to 2028-29.
The Scheme will benefit
domestic manufacturers, help in creating employment and is expected to
contribute to the availability of wider range of affordable medicines for
consumers.
The scheme is expected
to promote the production of high value products in the country and increase
the value addition in exports. Total incremental sales of Rs.2,94,000
crore and total incremental exports of Rs.1,96,000 crore are estimated during
six years from 2022-23 to 2027-28.
The scheme is expected
to generate employment for both skilled and un-skilled personnel, estimated at
20,000 direct and 80,000 indirect jobs as a result of growth in the sector.
It is expected to
promote innovation for development of complex and high-tech products including
products of emerging therapies and in-vitro Diagnostic Devices as also
self-reliance in important drugs. It is also expected to improve
accessibility and affordability of medical products including orphan drugs to
the Indian population. The Scheme is also expected to bring in investment
of Rs.15,000 crore in the pharmaceutical sector.
The scheme will be part
of the umbrella scheme for the Development of Pharmaceutical Industry. The
objective of the scheme is to enhance India's manufacturing capabilities by
increasing investment and production in the sector and contributing to product
diversification to high value goods in the pharmaceutical sector. One of the
further objectives of the scheme is to create global champions out of India who
have the potential to grow in size and scale using cutting edge technology and
thereby penetrate the global value chains.
The salient features of
the Scheme are as follows:-
Target Groups:
The
manufacturers of pharmaceutical goods registered in India will be grouped based
on their Global Manufacturing Revenue (GMR) to ensure wider applicability of
the scheme across the pharmaceutical industry and at the same time meetthe
objectives of the scheme. The qualifying criteria for the three groups of
applicants will be as follows-
(a) Group
A: Applicants having Global Manufacturing Revenue (FY 2019-20) of
pharmaceutical goods more than or equal to Rs 5,000 crore.
(b) Group
B: Applicants having Global Manufacturing Revenue (FY 2019-20) of
pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.
(c) Group
C: Applicants having Global Manufacturing Revenue (FY 2019-20) of
pharmaceutical goods less than Rs 500 crore. A sub-group for MSME industry will
be made within this group, given their specific challenges and circumstances.
Quantum of Incentive:
The total
quantum of incentive (inclusive of administrative expenditure) under the scheme
is about Rs 15,000 crore. The incentive allocation among the Target Groups is
as follows:
(a)
Group A: Rs 11,000 crore.
(b)
Group B: Rs 2,250 crore.
(c)
Group C: Rs 1,750 crore.
The
incentive allocation for Group A and Group C applicants shall not be moved to
any-other category. However, incentive allocated to Group B applicants, if left
underutilized can be moved to Group A applicants.
Financial
Year 2019-20 shall be treated as the base year for computation of incremental
sales of manufactured goods.
Category of Goods:
The scheme
shall cover pharmaceutical goods under three categories as mentioned
below:
- Category 1
Biopharmaceuticals;
Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell
based or gene therapy drugs; Orphan drugs; Special emptycapsules like HPMC,
Pullulan, enteric etc.; Complex excipients; Phyto-pharmaceuticals: Otherdrugs
as approved.
(b)Category 2
Active
Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.
(c)Category 3
(Drugs not covered under Category 1 and Category 2)
Repurposed
drugs; Auto immune drugs, anti-cancer drugs, anti-diabetic drugs,
anti-infective drugs, cardiovascular drugs, psychotropic drugs and
anti-retroviral drugs; In vitro diagnostic devices; Other drugs as approved;
Other drugs not manufactured in India.
Rate of
incentive will be 10% (of incremental sales value) for Category 1 and Category
2 products for first four years, 8% for the fifth year and 6% for the sixth
year of production under the scheme.
Rate of
incentive will be 5% (of incremental sales value) for Category 3 products for
first four years, 4% for the fifth year and 3% for the sixth year of production
under the scheme.
The duration of the scheme will be from FY
2020-21 to FY 2028-29. This will include the period for processing of
applications (FY 2020-21), 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.
Background:
Indian
pharmaceutical industry is 3rd largest in the world by volume and is worth USD
40 billion in terms of value. The country contributes 3.5% of total drugs and
medicines exported globally. India exports pharmaceuticals to more than 200
countries and territories including highly regulated markets such as USA, UK,
European Union, Canada etc. India has a complete ecosystem for the development
and manufacturing of pharmaceuticals with companies having state of the art
facilities and highly skilled/technical manpower. The country also has a number
of renowned pharmaceutical educational and research institutes and a robust
support of allied industries.
At present,
low value generic drugs account for the major component of Indian exports,
while a large proportion of the domestic demand for patented drugs is met
through imports. This is because the Indian Pharmaceutical sector lacks in high
value production along with the necessary pharma R&D. In order to
incentivize the global and domestic players to enhance investment and
production in diversified product categories, a well-designed and suitably
targeted intervention is required to incentivise specific high value goods such
as bio-pharmaceuticals, complex generic drugs, patented drugs or drugs nearing
patent expiry and cell based or gene therapy products etc.
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