What is the PLI scheme?
What are its objectives?
Eligibility to apply under the PLI scheme?
What are the product categories to apply for the PLI scheme?
How many groups are created to list applicants?
How does the PLI scheme help pharmaceutical companies?
Seeing the upward trajectory of the Pharma Industry in India, the government is constantly striving to maintain its current position and improvise its reach to move to the next level.
One of the current initiatives taken by the government to rouse manufacturing in India is implementing the PLI scheme.
To scale production levels, the government is now focusing on improving manufacturing capabilities in India. Thus, India is making frequent efforts to raise its economy by incentivizing global and domestic players in the pharma field.
While it may focus on enhancing its production through increasing manufacturing capabilities, it hopes to strengthen pharma exports in the future.
What is the PLI Scheme?
PLI stands for Production-linked Incentives. It is one of the schemes launched in 2021 by the Government of India under the Atmanirbharta initiative.
This scheme was launched to promote the manufacturing of high-value goods in the pharmaceutical sector.
The central government has introduced this, aiming to give companies high incentives for their incremental sales of manufactured products from multiple units. This is to cut down on import bills and promote quality manufacturing within the country.
The scheme is highly backed by great finances, approximately 15,000 crores. Thus the scheme fosters a competitive environment, making pharma business owners more ambitious and thriving in the Global domestic market.
What Are Its Objectives?
PLI scheme has facilitated not only the pharma sector but also the textile, automobiles, and electronics. Thus, the scheme is part of the government’s efforts to attract investments, boost exports, create job opportunities, and increase manufacturing facilities to make India a global manufacturing hub.
Its key objectives in the pharmaceutical industry are:
1. Reducing dependency- This is accomplished by incentivizing manufacturers based on their incremental production to produce goods within the country. It helps to lower the rate of exports and thus the dependency.
2. Innovate production- The scheme acts as a catalyst to provide substantial financial support to encourage people to develop innovative products. Hence, companies may receive additional incentives for developing novel products.
3. Boost competence- The scheme also provides a road map to success by providing them with a stable and predictable policy environment. This has encouraged companies to strive for higher efficiency and maximize their productivity to raise their incentives.
4. Increase production of complex generics and API- Due to the country’s high dependency on China for API; it has reduced the high investments in API. This has also strengthened API manufacturing capabilities. This has also led Indians to develop and manufacture complex structures for generic medicines to increase the country’s quality and variety of medications.
Eligibility to Apply Under the PLI Scheme?
The applicants are selected based on whether they qualify for predefined objectives. This includes the required experience, capacity, turnover, and high production levels to get selected. The selection criteria shall be elaborated in the defined guidelines.
Eligibility criteria for getting selected:
- The pharma project must be a Greenfield project.
- The applicant’s net worth should be at least 30% of the total committed investment.
- The proposed domestic value addition by the applicant should be at least 90% for fermentation-based products and 70% for chemical synthesized-based products.
- The applicant should not have been declared a bankrupt or willful defaulter reporter or fraud.
- The applicant applying for this manufacturing facility must have its existing manufacturing facilities.
- It is also necessary for an applicant to manufacture Pharmaceutical products under this scheme’s category.
- Listed applicants among the Non-Performing Assets are considered ineligible.
All participants chosen for incentives are based on higher sales of their pharmaceutical products. For an initial year, they are expected to achieve minimum threshold sales as per the scheme guidelines. It gets extended to a regular 7% per year for later years to achieve a minimum percentage growth.
What Are the Product Categories to Apply for the PLI Scheme?
The scheme covers specialized pharma products allowed to manufacture under the scheme of PLI. These are categorized into three categories:
The first category- consists of Bio Pharmaceuticals, complex generic drugs, patent drugs, gene therapy drugs, orphan drugs, capsules, complex exhibitions, special empty capsules, and other approved drugs.
The second category- consists of active Pharmaceutical ingredients, key starting materials, and drug intermediates.
The third category- This does not include products of Categories 1 and 2. It consists of the repurposed drug, In vitro Diagnostic devices, auto-immune, anti-cancer, anti-diabetic, anti-infective, cardiovascular, psychotropic, and retroviral drugs.
The Honourable Minister for Chemicals and Fertilizers approves the selected candidates from each category.
How Many Groups Are Created to List Applicants?
To enable greater applicability while satisfying the scheme’s objectives, the manufacturers are grouped based on their Global Manufacturing Revenue (GMR).
There are three groups of applicants which are followed as :
Group A: Applicants with a Global Manufacturing Revenue (FY 2019-20) of INR 5,000 crore or more.
Group B: Applicants with Global Manufacturing Revenue (FY 2019-20) ranging from INR 500 (inclusive) cr to INR 5,000 cr.
Group C: Applicants with less than INR 500 crore in global manufacturing revenue (FY 2019-20). Given the special issues and conditions of the MSME industry, a sub-group will be formed within this group.
In 2021, the industry responded positively to the program, as 278 applications were received and 55 applicants were chosen.
Segmenting the applicants, group A consisted of 11 applicants, group b consisted of 9 applicants and group c consisted of 35 applicants. Out of all, 20 were Micro, Small, and Medium-Sized Enterprises (MSMEs).
For this fiscal year 2023, DoP (Department of Pharmaceuticals) has set aside Rs 690 crore as the budget allocation for the PLI Scheme’s first production year.
How Does PLI Scheme Help Pharmaceutical Companies?
It has been noted that some big pharma companies are attempting to break into the global pharmaceutical business. Thus leading to the building of businesses in terms of size and scale, the government is working towards helping pharma businesses by-
- Designing specific guidelines that can lead to high-value goods and quality production. (Via R&D)
- Developing the ability to compete globally by strategizing through product diversification and more product registrations.
- Helping to create potential job opportunities that positively impact the economy and the country’s employment rates.
- Pushing companies to modernize their manufacturing facilities and adopt advanced technology to manufacture products efficiently.
- Leading companies to produce in bulk and thus reduce the cost of medicines while increasing their availability in the pharma market.
- Increasing domestic production with new plants, machinery, equipment, and utilities for more exports to make Indian healthcare more affordable and famous worldwide.
Thus by introducing such policies and encouraging novel products to manufacture, the government aims for India to evolve and soon become Atmanibhar Bharat.
Unimarck Pharma is a pharmaceutical company that has been dealing in the pharma business since 1984. We work to provide pharma solutions, making the medications cost-effective and of a higher quality.
We regard the government’s efforts and support such schemes that benefit existing and new manufacturers. As a 40-year-old pharma manufacturing company, we welcome and encourage new entrants with our contract manufacturing services that can bring competence and innovation to boost the overall standard of the Indian pharma industry.