The 3 Schemes for Pharmaceuticals Manufacturing
The Indian pharmaceutical industry is the 3rd largest in the world by volume and valued at $41 bn. The country contributes 3.5% of total drugs and medicines exported globally to over 200+ countries.
To ensure greater resilience to external shocks, enforce greater drug security and boost the capacity for domestic production for critical bulk drugs and high-value products alike, the Department of Pharmaceuticals has launched 3 supporting schemes to incentivize the global and domestic players to enhance investment and production in these product categories.
The Schemes are envisioned to ensure greater resilience of the Indian pharmaceutical industry to external shocks and contribute significantly to achieving a higher objective of affordable healthcare in the country and globally on a sustained basis.
Scheme 1
Production Linked Incentive Scheme (PLI)
As notified on 21 July 2020
Overview
The Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) in India. Production Linked Incentives of upto INR 6,940 crores have been approved.
A financial incentive will be given to eligible manufacturers of identified 41 eligible products which covers 53 APIs, for 6 years, committed investment and sales made by selected applicant for the eligible products. The rates will vary for Fermentation based products and Chemically Synthesized products.
Round 1
Closed for Application
Round 2
Last Date for Application: 28 July 2021
Highlights
Incentives
Fermentation products:
FY 2022-26: 20%
FY 2026-27: 15%
FY 2027-28: 5%
Chemically synthesized products:
FY 2021-27: 10%
Eligibility
Support under the scheme shall be provided only to manufacturers of critical KSMs/DIs and APIs registered in India subject to committed investment and minimum annual production capacity.
Tenure of scheme
Tenure of the Production Linked Incentive Scheme is FY 2020-21 to FY 2029-30. Base year of the scheme is FY 2019-20.
Target Segments Eligible under PLI 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
Please click here for the detailed list of products.
Eligibility
Eligibility for selection
- 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.
- The applicant should not have been declared as bankrupt or wilful defaulter or defaulter or reported as fraud by any bank or financial institution or non-banking financial company.
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.
For a further, comprehensive list of eligibility criteria, please click here.
Process Flow
Step One
Application Process
- Submission of Application – Applicant
- Application fees (Please click here for details)
- Prima Facie Examination– Project Management Agency (PMA)
- Letter of Acknowledgement issued – PMA
- Letter of Acknowledgement to be issued within 15 working days post completion of examination
- Application Appraisal – PMA
- Each application shall be reviewed and details shall be entered in the detailed checklist by the PMA upon receipt of the application.
- The PMA will accordingly make appropriate recommendations to the Technical Committee (TC) for approvals under the Scheme.
- The final recommendations of the PMA and the Technical Committee shall be placed before Empowered Committee (EC) for its approval.
- All the applications shall be finalized within 60 days from the date of issuance of acknowledgement of receipt of the application.
- Approval Letter to Applicant (within 5 working days of receiving approval from the Competent Authority – Department of Pharmaceuticals (DoP)
- The aforesaid approval letter shall not be construed as a guarantee for disbursement of incentive as the same will be dependent upon verification of eligibility after submission of disbursal claim and other criteria defined in these Guidelines.
- Submission of Bank Guarantee along with undertaking
- The selected applicant shall submit, within two weeks of date of issuance of approval letter by the PMA a bank guarantee along with undertaking, in the format given at Appendix D of the official detailed guidelines of an amount equivalent to 1% of the committed investment in favour of DoP, valid for 365 days to be rolled over till the time 90% of the committed investment in the project is made.
Step Two
Disbursement Process
- Submission of Claim for Disbursement of Incentive (submitted only on a half-yearly/annual basis)– Applicant
- Verification of Claims and Application for Incentives – PMA
- In case of any doubt with respect to determining eligibility and incentive amount due, the PMA may refer to DoP for clarification.
- Disbursement of Funds – PMA
- PMA to disburse funds after completion of all pre-disbursal formalities by the applicant and approval from the Competent Authority within 60 days of receipt of the claim.
- Applicants will be required to reconcile Incremental Sales of eligible products, based on which claims for disbursement of incentive have already been filed, with documents as prescribed by the PMA, by 31 December of the financial year subsequent to which the claim pertains
- Verification of the reconciliation of disbursement claims – PMA
For further clarification, please refer to the detailed guidelines.
FAQs
Frequently Asked Questions
Who can be an Applicant under the PLI Scheme for APIs, KSMs and Drug Intermediaries?
The Applicant for the purpose of the Scheme shall be any Proprietary Firm or Partnership Firm or Limited Liability Partnership (LLP) or a Company registered in India proposing to manufacture eligible products and making an application for seeking approval under the Scheme. The applicant shall make committed investment in a Greenfield Project.
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What are the target segments and respective eligible products covered under PLI Scheme?
Target Segment shall mean one of the four segments viz.:
- Key Fermentation based KSMs / Drug Intermediates
- Niche Fermentation based KSMs / Drug Intermediates / APls
- Key Chemical Synthesis based KSMs / Drug Intermediates
- Other Chemical Synthesis based KSMs / Drug Intermediates/ APls
Eligible Products:
Product manufactured in India and included in the 'List of Eligible Products' in Appendix A of the Guidelines. There are 41 eligible products for which the Scheme is proposed covers the 53 APIs that have bene approved by Government.
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Can the company be 100% foreign-owned or is 51% share by a local required (under PLI Scheme)?
There is no restriction in the foreign ownership under the PLI Scheme for Bulk Drugs.
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Can the land used for the manufacturing facility have foreign ownership (under PLI Scheme)?
The foreign ownership of land is not under the preview of these Guidelines.
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Does the PLI scheme provide a subsidy for the land used?
There is no provision for a subsidy for land under the PLI Scheme for Bulk Drugs.
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Does "Threshold investment" mean this is the minimum investment required from the investor (under PLI Scheme)?
As per clause 2.32, Threshold Investment is the minimum investment required by an for each eligible product. The amount of threshold investment depends upon the product for which application is being filed by the applicant. Appendix B of the detailed guidelines provides detail of threshold investment required for each product.
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What does appendix E of the detailed guidelines for PLI Scheme show?
Table 1 of Appendix E refers to the total incentive available for each Target Segment and the number of products covered under that Target Segment.
Accordingly, 04 - Fermentation Based KSM/ Drug Intermediaries refers to the maximum incentive available for 4 products covered under that Target Segment, in the applicable financial year and during the tenure of the Scheme.
Table 2 of Appendix E gives detail of maximum incentive available to any applicant across the tenure of the Scheme.
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To calculate the rate of incentive under PLI Scheme, which FY sale revenue figure is used?
- Please refer to paragraph 14 of the detailed guidelines.
- The incentive under this Scheme shall be calculated on the Net Sales (Domestic) of Eligible Product for any financial year at the rate given in Table 2 of Appendix E.
- For example, in case of Penicillin G incentive shall be calculated on Domestic Sales of FY 2023-24 (as determined, in accordance with Scheme Guidelines) at 20%.
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Is the PLI scheme applicable for 2020-2021?
- The Scheme is effective from July 27, 2020. The Scheme has two Phase (i) Setting up a greenfield project under the Scheme and (ii) Sales eligible for incentive. Please refer clause 7.7 of the Scheme Guidelines, which provides for a gestation period of 1 year for chemical synthesis and 2 years for fermentation based products.
- Investment made on or after April 01, 2020 in the Greenfield Project (refer clause 6.1.1) shall be considered for threshold investment. Accordingly, any investment made during FY 2020-21 shall be considered for threshold investment.
- Incentive under this scheme shall be applicable on the sales from FY 2023-24 for fermentation based product and from FY 2022-23 for Chemically Synthesized based product.
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Are there any corporate income tax exemption available under the PLI Scheme?
There is no corporate tax exemption provided under this Scheme.
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What is the eligibility for selection under PLI Scheme?
- Eligibility for selection
- The project shall be a greenfield project as defined under the 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.
- The applicant should not have been declared as bankrupt or wilful defaulter or defaulter or reported as fraud by any bank or financial institution or non-banking financial company.
- Eligibility for incentive
- A selected applicant must meet both the eligibility criteria of committed investment and minimum annual production capacity as given in Appendix B of these guidelines.
- A selected applicant will have to separately meet the above eligibility criteria of minimum annual production capacity and committed investment for each of the eligible products, for which approval has been granted under the Scheme.
- In case, the committed annual production capacity is more than minimum annual production capacity as given in Appendix B, the selected applicant shall have to complete the installation of committed annual production capacity and make committed investment, as stated in the approval letter, in order to be eligible to claim incentive.
- The applicant shall have to achieve minimum stipulated DVA as per Clause 4.1.3 (90% for fermentation based product and 70% for chemically synthesis based products) for a claim period in order to remain eligible for receiving incentive for that claim period, subject to relaxation given in Clause 4.2.5
- If the DVA achieved for any particular claim period is between 80% to 90% in case of fermentation based product and between 60% to 70% in case of chemical synthesis based product, the applicant will get 50% of the eligible incentive. This relaxation would be available for a period of 12 months only (one claim period of 12 months or any two claim periods of 6 months) during the tenure of the Scheme.
- If the incentive availed by an applicant for any financial year, for any reason, is less than the maximum available incentive for that applicant in that financial year, the applicant shall not be entitled to claim the differential amount in subsequent financial years.
- Eligibility under the Scheme shall not affect eligibility under any other scheme and vice versa.
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- Eligibility for selection
Why are there 41 products listed but 53 KSMs under PLI Scheme?
The 41 eligible products for which the Scheme is proposed covers the 53 APls which have been approved by the Government. The list of eligible products can be found in Appendix A of the detailed Guidelines released by DoP.
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What is the role of the Project Management Authority (PMA), Technical Committee (TC) and Empowered Committee (EC) under PLI Scheme?
Project Management Agency (PMA): Refers to the financial institution(s) or any other authority(ies) appointed by the DoP to act on its behalf for receipt and appraisal of applications, verification of eligibility and examination of disbursement claims through any method / document deemed appropriate and for managing the above-mentioned in accordance with these guidelines.
Technical Committee (TC): A Technical Committee constituted by DoP to assist the Empowered Committee for discharging its functions.
Empowered Committee (EC): A committee constituted by DoP and comprising of the following members:
- CEO, NITI Aayog (Chairman)
- Secretary, Department of Pharmaceuticals
- Secretary, Department of Chemicals and Petrochemicals
- Secretary, Department for Promotion of Industry & Internal Trade
- Secretary, Department of Commerce
- Secretary, Ministry of Environment, Forest and Climate Change
- Secretary, Department of Health & Family Welfare
Experts may be invited as special invitees, as may be felt necessary, from time to time.
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What is the period for/deadline for making an application under the PLI Scheme?
The application window shall be open for 120 days from the date of issuance of the guidelines (as issued on 27 July 2020).
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What if an applicant exceeds the minimum annual production capacity under PLI scheme?
An applicant may commit annual production capacity higher than the minimum annual production capacity. However, the capacity committed shall be in whole number multiple of the minimum annual production capacity, along with commitment to invest corresponding multiple of threshold investment, as specified in Appendix B of the detailed Guidelines released by Department of Pharmaceuticals.
For example, in case of Penicillin G the minimum annual production capacity eligible for incentive is 5,000 MT and threshold investment is INR 400 crores. An applicant may commit 10,000 MT annual production capacity along with commitment to make investment of INR 800 crores.
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If an applicant avails less than the maximum available under PLI Scheme incentive for that applicant in that financial year, can it be claimed in subsequent years?
If the incentive availed by an applicant for any financial year, for any reason, is less than the maximum available incentive for that applicant in that financial year, the applicant shall not be entitled to claim the differential amount in subsequent financial years.
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What categories of expenditure are considered for determining threshold investment under the PLI scheme? Does it include R&D (and associated R&D manpower), machinery used to make other KSMS/DIs/APIs, consumables, raw materials/plant machinery and equipmen
Expenditure incurred on new Plant, Machinery, Equipment and Associated Utilities:
This shall include expenditure on new plant, machinery, equipment and associated utilities. It shall also include expenditure on packaging, freight/ transport insurance, and erection and commissioning of the new plant, machinery, equipment including laboratory equipment and associated utilities. Associated utilities would include essential equipment required in operation areas such as Clean Rooms, Air Curtains, Temperature and Air Quality Control Systems, Compressed Air, Water & Power Supply and Control Systems. Associated utilities shall also include ETP, incinerators, effluent lines / tanks / treatment, supply lines of water / sewerage / solvents/ gases, solvent recovery, solid waste treatment plant, solvent storage tanks, LPG storage tanks, warehousing, electricity lines, power generation facility and communication lines for telephone internet within the establishment. All non-creditable taxes and duties would be included in such expenditure.
Expenditure incurred for establishment of new Research and Development (R&D) facility:
This shall include capital expenditure, R&D and product development related to eligible product only. All non- creditable taxes and duties would be included in such expenditure.
No second hand/ used I refurbished plant, machinery, equipment, utilities or R&D equipment shall be used to manufacture the eligible product.Expenditure incurred on Land:
The expenditure incurred on land required for the project / unit shall not be considered for determining threshold investment.
Expenditure incurred on Building:
This shall include expenditure on construction of building where new plant and machinery are installed and shall also include expenditure on associated infrastructure including internal roads and compound wall. However, the expenditure on the associated infrastructure shall be limited to 20% of the investment in new plant & machinery. Further, expenditure on guest house building, recreational facilities, office building, residential colonies and similar structures shall not be considered for determining the threshold investment.
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How will the Domestic Value Added (DVA) be calculated under PLI scheme?
Domestic Value Addition: Domestic value addition shall be computed as below (A divided by B):
- A: Net sales turnover minus value of non-originating material and services used in manufacturing of eligible product
- B: Net sales turnover
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Can an applicant avail both PLI and an alternative incentive from the Government?
Eligibility under the PLI Scheme shall not affect eligibility under any other scheme and vice versa.
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If a company is manufacturing two or more items, does the company have to fulfil qualification and eligibility criteria for each of the items individually under the PLI scheme?
An applicant can apply for more than one eligible product. However, a separate application along with the application fee is required to be submitted for each eligible product.
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Scheme 2
Production Linked Incentive 2.0 (PLI 2.0)
As notified on 03 March 2021
Overview
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.
Salient Features of the Scheme
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 meet the objectives of the scheme. The qualifying criteria for the three groups of applicants will be as follows:
- Group A: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to INR 5,000 cr.
- Group B: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between INR 500 (inclusive) cr and INR 5,000 cr.
- Group C: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than INR 500 cr. Within this group, a sub-group for MSME industry will be made given their specific challenges and circumstances.
Highlights
Incentives
The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about INR 15,000 cr. The incentive allocation is as follows:
Group A: INR 11,000 cr
Group B: INR 2,250 cr
Group C: INR 1,750 cr
Tenure of the Scheme
The duration of the scheme will be from FY20 - FY28. This will include period for processing of applications (FY20), optional gestation period of 1 yr (FY21), incentive for 6 yrs and FY28 for disbursal of incentive for sales of FY27
Base Year of the Scheme
Base year of the scheme is FY19
Target Segments
The scheme shall cover pharmaceutical goods under three categories as mentioned below:
- Category 1: Bio-pharmaceuticals, Complex generic drugs, Patented drugs or drugs nearing patent expiry
- Category 2: Active Pharmaceutical Ingredients / Key Starting materials / Drug Intermediates
- Category 3: (Drugs not covered under Category 1 and Category 2):
- Repurposed drugs
- Autoimmune 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
For the list of detailed categories, please click here.
Incentives
Quantum of Incentive:
The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about INR 15,000 cr. The incentive allocation is as follows:
- Group A: INR 11,000 cr
- Group B: INR 2,250 cr
- Group C: INR 1,750 cr
Rate of Incentive:
- The rate of incentive on incremental sales (over base year) of pharmaceutical goods covered under Category 1 and 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 (over base year) of 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.
Eligibility
Eligibility for selection
- The applicants will be selected based on pre-defined objective criteria to assess their experience, capacity to grow in scale and innovate. The selection criteria shall be elaborated in the scheme guidelines.
Eligibility for incentive
- 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.
For a further, comprehensive list of eligibility criteria, please click here.
Process Flow
Approval and Disbursement Process
- Application under the Scheme can be made by any manufacturer registered in India.
- An application, complete in all aspects, will have to be submitted before the due date. Acknowledgment 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 guidelines.
Scheme 3
Bulk Drug Parks Scheme
As notified on 21 July 2020
Overview
The scheme on Promotion of Bulk Drug Parks for financing Common Infrastructure Facilities in 3 Bulk Drug Parks with financial implication of INR 3,000 crore for 2020-2021. Assistance under the scheme will be admissible for such facilities by State Government in Bulk Drug Parks. Parks will have common facilities such as solvent recovery plant, distillation plant, power and steam units, common effluent treatment plant etc.
Highlights
Incentives
INR 3000 Crores for providing financial assistance for construction of Common Infrastructure Facilities in 3 Bulk Drug Parks with a maximum limit of INR 1000 Crore.
Tenure of the Scheme
The scheme shall be operational during the period FY 2020-2021 to 2024-2025.
Proposer
The proposer shall be a State Government who can make only one proposal of Bulk Drug Park under the Scheme having a minimum area of 1000 acres. For North Eastern and Hilly States the minimum area is 700 acres.
Infrastructure facilities
Common Facilities under the sub-scheme will consist of the creation of tangible assets as Common Facility Centres (CFCs). The capacities of the respective facilities will be commensurate to the number of manufacturing units in the park. Some of the indicative Common facilities are available here.
― State Implementing Agency (SIA)
SIA shall be a legal entity (with minimum 51% equity shareholding of State Government in the paid-up capital of SIA) set up by the State Government for the purpose of implementing the Bulk Drug Park Project. The SIA shall be responsible for day to day management of Bulk Drug Park.
The SIA shall be responsible for:
- Preparing the Detailed Project Report (DPR) covering the technical, financial, institutional, and operational aspects of the Common Infrastructure Facility project of the Bulk Drug Park.
- Ensuring and making available balance amount of the Project Cost.
- Obtaining all statutory approvals, clearances including all environmental clearances.
- Providing single window system for various approvals and testing certificates.
- Recruiting suitable professionals to ensure that the project is executed smoothly.
- Implementing various interventions as outlined and approved in DPR.
- Preparing event report at every stage, an ex-post activity chart with complete breakdown of activities, the original expected dates, and actual dates along with the flow of fund requirements as specified in DPR.
- Furnishing regular progress reports of the project to DoP / PMA.
Role of State Government
- Submission of Project Report
- Providing encumbrances free land for the development of the Bulk Drug Park
- Ensuring and making available balance amount of the Project Cost through budgetary and/ or other sources.
- Obtaining all statutory approvals/ clearances including all environmental clearances.
- Providing a single window system for various approvals and testing certificates.
- Providing necessary infrastructure, such as access road, power, water supply, to the park.
- Providing all project related clearances expeditiously.
- Providing all clearances required by individual bulk drug units expeditiously.
- Promoting the Bulk Drug Park at National & International level.
- Provide necessary electricity supply lines and water supply lines with the necessary infrastructure, up to the project site.
Process Flow
Step One
- Proposal and selection: State Government to submit Project Report (PR) to the State Steering Committee (SSC) constituted by DoP. The PR is to include the proposed cost of establishing the bulk drug park including cost of common infrastructure facilities. The States obtaining top three ranks will be considered for selection under the Scheme.
- Selection of Proposal: The evaluation criteria provided in detailed guidelines released by DoP shall be used for selection of States. The States obtaining top three ranks will be considered for selection under the Scheme.
- In Principal approval under the Scheme: PMA will evaluate the proposals and place its recommendations before SSC for consideration. After receiving in-principle approval from the SSC, DoP will issue a letter of in principle approval to the selected States.
- Submission of DPR: To be prepared by the SIA and submitted to the Department of Pharmaceuticals (DoP) within 180 days of issuance of in- principle approval letter.
- Final approval: PMA will appraise the DPR and submit its recommendations to the SSC for its consideration. After receiving final approval from the SSC, DoP will issue letter of final approval to the selected State.
Step Two
Disbursement Process
To be disbursed in four instalments. Guidelines for the release of funds are available here.
FAQs
Frequently Asked Questions
Who can be an Applicant under the Scheme for Promotion of Bulk Drug Parks?
This is a Central Sector Scheme and so a one-time grant-in-aid will be provided for creation of common infrastructure facilities in selected Bulk Drug Park proposed by a State Government. The scheme will be implemented through a State Implementing Agency (SIA), a legal entity, set up by the concerned State Government.
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Who can be a Proposer under the Scheme? What is the role of the Proposer?
The proposer for the purpose of the Scheme shall be a State Government and is an applicant under the scheme. The proposer shall submit a Project Report (PR) including the proposed cost of establishing the bulk drug park including cost of CIF. State Government can make only one proposal of Bulk Drug Park under this Scheme.
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What are considered in ‘Preferred Products’?
The preferred products are those APls/DIs/KSMs for which the country is majorly dependent on imports. A list of such products is provided in Appendix 2 of the detailed Guidelines released by DoP.
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What are the mandated specifications of the Bulk Drug Park under the Scheme?
- Maximum grant-in-aid for one bulk drug park will be limited to Rs 1000 crore
- The proposed park shall not be less than 1000 acres in area. For North Eastern States and Hilly States (i.e. Himachal Pradesh, Uttarakhand, UT of Jammu & Kashmir and UT of Ladakh), the area of proposed park shall not be less than 700 acres.
- At least 50% of the total area of the Bulk Drug Park shall be made available for allotment to individual bulk drug units.
- Formulation units shall not be permitted in the Park.
- The State Government should identify a suitable location for establishment of bulk drug park keeping in mind various factors viz, environmental pollution, assured availability of power, assured availability of water, transport connectivity with railways, national highway, port, airport, etc. The identified location should be well away from eco-sensitive zone of protected areas.
- The proposer State shall submit an undertaking that it shall not increase the land lease rent and utility charges, as declared in the proposal, beyond 5% per annum, for the next 10 years.
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What is included in the list of common facilities?
The Common facility with capacity commensurate with the expected number of manufacturing units in the bulk drug park, provided by the State Implementing Agency (SIA). Common facilities include:
- Central Effluent Treatment Plants (CETP)
- Solid waste management
- Storm water drains network
- Common Solvent Storage System, Solvent recovery, and distillation plant
- Common Warehouse
- Dedicated power sub-station and distribution system with the necessary transformers at factory gate
- Raw, Potable and Demineralized Water
- Steam generation and distribution system
- Common cooling system and distribution network
- Internal road network, Compound Wall
- Common logistics
- Advanced testing Centre
- Regulatory awareness facilitation Centre
- Emergency Response Centre
- Safety/ Hazardous operations audits centre
- Centre of Excellence
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How will the incentive be disbursed under Bulk Drug Parks Scheme?
Where bank finance is involved, written commitment of the bank concerned to release proportionate funds shall also be necessary before release of Central Government assistance.
Grant-in-aid will be released in four instalments: 30%, 30, 30%,10% of the percentage of funds respectively. For details, click here.
(Clause 17 of the Guidelines details the instalments.)
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Is special consideration given to North Eastern States and Hilly States?
Yes. In case of North Eastern States and Hilly States (i.e. Himachal Pradesh, Uttarakhand, UT of Jammu & Kashmir and UT of Ladakh), the grant -in-aid will be 90% of the common infrastructure facilities. For all other states, the grant-in-aid will be 70% of the project cost of the common infrastructure facilities (CIF).
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What is the Financial Assistance provided under the Scheme and what is the duration for the same?
- Total financial outlay of the Scheme is INR 3000 Crore.
- Three bulk drug parks will be supported under the Scheme.
- Maximum grant-in-aid for one bulk drug park will be limited to INR 1000 crore.
- The duration of the Scheme is from FY 2020-202 1 to FY 2024-2025.
- Under the scheme, a one-time grant-in-aid will be provided for creation of common infrastructure facilities in selected Bulk Drug Park proposed by a State Government.
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What is the role of the State Implementing Agencies, the Project Management Agency, Technical Committee and Scheme Steering Committee?
- State Implementing Agency (SIA): The SIA shall be a legal entity (with minimum 51% equity shareholding of State Government in the paid-up capital of SIA) set up by the State Government for the purpose of implementing the Bulk Drug Park Project. A shall be responsible for day to day management of Bulk Drug Park.
- A Project Management Agency (PMA) will be nominated by Department of Pharmaceuticals (hereinafter referred as DoP) for providing secretarial, managerial and implementation support to DoP for effective implementation of the Scheme.
- Scheme Steering Committee (SSC): The proposals under the Scheme will be approved by the SSC as constituted by DoP. The SSC shall take all decisions required for successful implementation of the Scheme, including any modifications if required. The SSC will be assisted by the Project Management Agency (PMA).
- Technical Committee constituted by the DoP will assist SSC in discharging its functions. TC will provide comments on any technical matter referred to by the DoP/ SSC.
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What is the period for making an application under the Scheme?
The proposal under the Scheme shall be made within 60 days of issuance of these guidelines, in the format provided at Annexure 1 of the detailed Guidelines released by DoP.
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What is a Detailed Project Report? How can this be prepared?
A Detailed Project Report (DPR) shall be prepared and submitted by the Proposer (State Government) to DoP along with the details as per the format given in Annexure 2 of the detailed Guidelines by the selected State Government within 180 days of date of issuance of in- principle approval letter.
In case, the selected State fails to submit the DPR in time or fails to implement the project as per the timelines stated in the DPR, the in-principle approval may be cancelled by the SSC.
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What is the selection process for States/UTs?
The evaluation criteria provided in Appendix I of the detailed Guidelines released by DoP shall be used for selection of States. The States obtaining top three ranks will be considered for selection under the Scheme.
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Team
Srividhya
Senior Investment Specialist
Sakshi Goyal
Investment Specialist
Aarushi Bajaj
Associate