Investment norms eased for PLI scheme for bulk drugs, medical devices

Accordingly, the ‘minimum threshold’ investment requirement has been replaced by ‘committed investment’ taking into account availability of technology choices which varies from product to product.

The Department of Pharmaceuticals had earlier come out with the following two Production Linked Incentive schemes – one for promotion of domestic manufacture of critical key starting materials, drug intermediates and active pharmaceutical ingredients and another for promoting domestic manufacture of medical devices.

Both the schemes were approved by the cabinet on 20 March 2020 and detailed guidelines for the implementation of the schemes were issued on 27 July 2020

Post issuance of the detailed guidelines, the department said it received several suggestions and inputs from the pharmaceutical and medical device industry seeking certain amendments in the scheme to enable effective participation of the industry in the two schemes. The suggestions were examined by the respective technical committees formed under the schemes. The recommendations of the technical committees were placed before the Empowered Committees chaired by CEO of NITI Aayog. After considering the recommendations of the technical committees, the EC approved the revision of the guidelines for both the schemes. Accordingly, the revised guidelines have been issued on 29 October 2020 and are available on the website of the Department of Pharmaceuticals under the tab “schemes”.

The main changes which have been effected in the revised guidelines for Production Linked Incentive (PLI) scheme for promotion of domestic manufacture of critical key starting materials, drug intermediates and active pharmaceutical ingredients in India are:

Replacement of the criteria of ‘minimum threshold’ investment with ‘committed’ investment by the selected applicant. The change has been made to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon choice of technology and it also varies from product to product. However, the provision for verification of the actual investment made by the selected applicant for the purpose of giving incentives under the scheme continues.

Also, the provision which restricts the sales of eligible products to domestic sales only for the purpose of eligibility for receiving incentives has been deleted, bringing the scheme in line with other PLI schemes and encouraging market diversification.

The minimum annual production capacity for 10 products, viz, Tetracycline, Neomycin, Para Amino Phenol (PAP), Meropenem, Artesunate, Losartan, Telmisartan, Acyclovir, Ciprofloxacin and Aspirin has also been reduced. Minimum annual production capacity is a part of eligibility criteria under the scheme.

The last date for receiving applications under the scheme is now extended by a week to 30 November 2020 (inclusive).

Similarly, the main changes which have been effected in the revised guidelines for Production Linked Incentive Scheme for promoting domestic manufacture of medical devices are:-

Replacement of the criteria of ‘minimum threshold’ investment with ‘committed’ investment by the selected applicant. The change has been made to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon technology used and it also varies from product to product. The provision for verification of the actual investment made by the selected applicant for the purpose of giving incentives under the scheme continues.

Change in the eligibility criteria of minimum sales threshold has also been effected in line with projected demand, technology trend and market development, for the purpose of availing incentive under the scheme.

The tenure of the scheme has been extended by one year keeping in view the capital expenditure expected to be done by the selected applicants in FY2021-22. Accordingly, the sales for the purpose of availing incentives will be accounted for 5 years starting FY 2022-2023 instead of FY2021-2022.

The last date for receiving applications under the scheme has now been extended by a week to 30 November 2020 (inclusive).

The Indian pharmaceutical industry is the third largest globally in terms of volume and contributes significantly to India’s economic growth and export earnings. The medical devices industry is identified as a sunrise sector with great potential for diversification and employment generation. The Government of India has launched several initiatives to support the pharmaceutical and medical devices industry to reach their potential in the coming years.