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Cabinet nod to incentive scheme for pharmaceuticals

 DTMT NETWORK
The Indian Cabinet has approved Production Linked Incentive (PLI) scheme for pharmaceuticals over a period of Financial Year 2020-21 to 2028-29. The objective of the scheme is to boost India's manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector.

“One of the further objectives of the scheme is to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains,” said the Indian government in a press release.

Under the scheme, the manufacturers of pharmaceutical goods registered in India will be grouped in three categories based on their Global Manufacturing Revenue (GMR) to ensure wider applicability of the scheme across the pharmaceutical industry and at the same time meet the objectives of the scheme.

One group includes applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to Rs 5,000 crore.

The second group will have Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.

Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than Rs 500 crore will be in the thgird group. A sub-group for MSME industry will be made within this group, given their specific challenges and circumstances, said the government.

The government has said that the total quantum of incentive (inclusive of administrative expenditure) under the scheme is about Rs 15,000 crore. The incentive allocation among the target groups is Rs 11,000 crore for group A, Rs 2250 crore for Group B and Rs 17250 crore for Group C.

The incentive allocation for Group A and Group C applicants shall not be moved to any-other category. However, incentive allocated to Group B applicants, if left underutilized, can be moved to Group A applicants.

Financial Year 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods. The scheme shall cover pharmaceutical goods under three categories.

First category is biopharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry, cell based or gene therapy drugs, orphan drugs and special empty capsules like HPMC.

The second category includes active pharmaceutical ingredients / Key starting materials  and drug intermediates. Drugs not covered under Category 1 and Category 2 will come under category 3.   

Total incremental sales of Rs 2,94,000 crore and total incremental exports of Rs.1,96,000 crore are estimated during six years from 2022-23 to 2027-28.

The scheme is likely to benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers.

The scheme is likely to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.

It is expected to promote innovation for development of complex and high-tech products including products of emerging therapies and in-vitro Diagnostic Devices as also self-reliance in imported drugs.

It is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population.  The scheme is also expected to bring in investment of Rs.15, 000 crore in the pharmaceutical sector.

The government has said that the rate of incentive will be 10% (of incremental sales value) for category 1 and category 2 products for the first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme.

Rate of incentive will be 5% (of incremental sales value) for category 3 products for the first four years, 4% for the fifth year and 3% for the sixth year of production under the scheme.


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