Govt sweetens the PLI schemes for pharma, medical device manufacturers

In a bid to ensure that the two Production Linked Incentive (PLI) schemes announced to give a fillip to the Indian pharmaceutical and medical device manufacturers are attractive enough for the industry, the government on Thursday announced several amendments keeping in mind several reservations expressed by the manufacturers.

Confirming the CNBCTV18 newsbreak, the Department of Pharmaceuticals (DoP) in a press statement said, “department 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 of the schemes which are chaired by CEO NITI Aayog. After considering the recommendations of the Technical Committees, the EC approved the revision of the guidelines for both the schemes.”

According to the changes notified, the government has “revised guidelines for 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 by replacing the criteria of ‘minimum threshold’ investment with ‘committed’ investment by the selected applicant,” DoP in a press statement said.

The government has also made changes to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon the choice of technology and it also varies from product to product.

Meanwhile, the government is very clear that the “provision for verification of the actual investment made by the selected applicant for the purpose of giving incentives under the scheme continues.”

Another breather extended to the industry by the government was by removing the “provision which restricts the sales of eligible products to domestic sales only, for the purpose of eligibility of receiving incentives, bringing the scheme in line with other PLI schemes and encouraging market diversification,” DoP in a statement said.

Thereby, meaning that now all sales will be considered to give incentives, including international sales and exports.

The government has also brought in “changes in the minimum annual production capacity for 10 products viz Tetracycline, Neomycin, Para Amino Phenol (PAP), Meropenem, Artesunate, Losartan, Telmisartan, Acyclovir, Ciprofloxacin and Aspirin. Minimum annual production capacity is a part of eligibility criteria under the scheme,” DoP said.

The last date for receiving applications under the PLI scheme for promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients has also been extended by a week to November 30, 2020.

On the other hand, for the PLI scheme for Promoting Domestic Manufacturing of Medical Devices, the changes include, the extension of the due date for submitting the applications, relaxing the minimum investment threshold and etc.

The government has replaced “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,” DoP said.

The government has also changed “the eligibility criteria of minimum sales threshold 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 FY 2021-22.

Accordingly, the sales for the purpose of availing incentives will be accounted for 5 years starting from FY 2022-2023 instead of FY 2021-2022.

The last date for receiving applications under the scheme is now extended by a week to November 30, 2020,” DoP in a statement said.

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 had launched several initiatives to support the Pharmaceutical and Medical Devices industry to reach their potential in the coming years.

The Department of Pharmaceuticals came out with two Production Linked Incentive schemes- for promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients in India and the other for Promoting Domestic Manufacturing of Medical Devices.

Both the schemes were approved by the Cabinet on March 20, 2020 and the detailed guidelines for the implementation of the schemes were issued by the Department on July 27, 2020.

Post issuance of the detailed guidelines, the department had been receiving 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.

To watch out for is how many players now sign up for these two schemes as the changes have been notified keeping industry suggestions as to the top priority.