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The Indian pharmaceutical industry is the 3rd largest in the world by volume. However, despite this achievement, we are highly dependent on imports of basic raw materials, viz., bulk drugs that are used to produce medicines. The Government of India is committed to ensuring the delivery of affordable healthcare in the country as well as ensuring that there is a steady supply of critical drugs. This has resulted in the launch of the Production Linked Incentive Scheme (PLI) for APIs, KSMs and DIs as well as the Scheme for Promotion of Bulk Drug Parks. These schemes have been constructed to incentivize large-scale manufacturing of critical bulk drugs and to build the required infrastructure for developing manufacturing clusters for across India. This aligns with the Government’s mission for self-reliance (atmanirbharta).
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 Rs. 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, based on threshold investment and domestic sales made by the selected applicant for the eligible products. The rates will vary for Fermentation based products and Chemically Synthesized products.
FY 2022-26: 20%
FY 2026-27: 15%
FY 2027-28: 5%
Chemically synthesized products:
FY 2021-27: 10%
Support is provided only to manufacturers of critical KSMs, Drug Intermediates and APIs in India for products manufactured with complete backward integration
Tenure of the Production Linked Incentive Scheme is FY 2020-21 to FY 2029-30. Base year of the scheme is FY 2019-20.
The four segments into which the eligible KSMs/DIs/APIs products have been divided based on their criticality and import dependence namely:
Please click here for the detailed list of products.
For a further, comprehensive list of eligibility criteria, please click here.
For further clarification, please refer to the detailed guidelines.
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 invest threshold investment in any Greenfield Project.
Target Segment shall mean one of the four segments viz.:
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.
There is no restriction in the foreign ownership under the PLI Scheme for Bulk Drugs.
The foreign ownership of land is not under the preview of these Guidelines.
There is no provision for a subsidy for land under the PLI Scheme for Bulk Drugs.
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.
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.
There is no corporate tax exemption provided under this 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.
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 the guidelines.
The Scheme will be implemented through a Project Management Agency (PMA) which will be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by DoP from time to time.
Technical Committee (TC): A Technical Committee constituted by DoP to assist the Empowered Committee for discharging its functions.
TC will also give its comments on any technical matter referred by DoP
Empowered Committee (EC): A committee constituted by DoP and comprising of the following members:
Experts may be invited as special invitees, as may be felt necessary, from time to time.
The EC shall meet as often as necessary to ensure timely consideration of applications and disbursement claims and conduct periodic review of the Scheme.
The application window shall be open for 120 days from the date of issuance of the guidelines (as issued on 27 July 2020).
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.
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.
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.
Domestic Value Addition: Domestic value addition shall be computed as below (A divided by B):
Eligibility under the PLI Scheme shall not affect eligibility under any other scheme and vice versa.
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.
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.
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.
The scheme shall be operational during the period FY 2020-2021 to 2024-2025.
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.
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.
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:
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.
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.
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.
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:
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.)
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).
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.
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.
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.