PLI scheme: Govt looks to get Rs 50,000 crore investments in pharma

In what could turn out to be a major boost to local manufacturing of high-value pharmaceuticals, the Union Cabinet on Wednesday gave in-principle approval to a Rs 15,000 crore production-linked incentive (PLI) scheme for pharmaceutical products.

The government expects to attract investments worth Rs 50,000 crore from domestic and multinational drugmakers through the scheme. The incentive will be in the range of 5-10 per cent of production value, sources said.

The idea is two-pronged — to reduce imports of high-value products like patented drugs, cell-based or gene therapy products, and also boost local manufacturing to a level where India becomes a net exporter of these products.

“A lot of patented products are made in countries like Ireland. Our aim is to encourage production in India through incentive schemes to attract MNCs to make these drugs here and use India as the manufacturing base for exporting to other countries,” said a senior government official directly involved in drafting the scheme.

The person added that the fine-print is yet to be worked out and a new committee will be formed by the Department of Pharmaceuticals to work out the modalities. “An in-principle nod has come, the finer details need to be worked out. However, we can say that the incentives will vary between 5-10 per cent of the production value for the product categories that are mentioned,” the source said. The committee will now work out details on whether this would be linked to production value or production volume. So far, there is no plan to link it to a minimum investment amount, the source added.

India imports several patented drugs, complex excipients, gene therapy products. Pharmaceutical excipients are substances used in dosage form not for any direct therapeutic action but to aid manufacturing process, to protect and support product stability. The pharmaceutical industry welcomed the move. Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), said this is a step in the right direction. “This is a good move to strengthen the pharmaceutical industry that is of strategic importance,” he added.

Earlier, the government had announced a Rs 6,940 crore PLI scheme to boost local manufacturing of bulk drugs (raw material to make medicines) as India imports almost 70 per cent of its requirement. According to sources, around 125 expressions of interest have been received. BR Sikri, chairman of the Federation of Pharma Entrepreneurs, said the scheme will encourage MSMEs and about 80 per cent of chemical synthesis products would now be made here. In addition, a Rs 3,420 crore PLI scheme for medical devices has also been approved.