PLI Scheme for Pharmaceuticals
Background and Rationale
- India is often called the “pharmacy of the world” because of its strength in generic medicines.
- However, in high-value areas like biopharmaceuticals, complex generics, and patented drugs, India lags behind global leaders.
- To make India a global manufacturing hub and reduce dependence on imports for critical ingredients (APIs, KSMs, DIs), the government launched the PLI Scheme for Pharmaceuticals.
Quick Facts
- Type: Central Sector Scheme (funded entirely by the Central Government).
- Purpose: To boost India’s pharmaceutical manufacturing capacity and make Indian companies global champions.
- Implementing Agency: Small Industries Development Bank of India (SIDBI) acts as the Project Management Agency.
- Tenure: From FY 2020–21 to FY 2028–29.
Objectives
- Strengthen India’s position in global value chains.
- Encourage investment in high-value pharmaceutical segments.
- Promote self-reliance in critical drug ingredients and create global champions from India.
Who Can Apply?
The scheme covers both MSMEs and Non-MSMEs. Eligible entities include:
- Proprietary Firms
- Partnership Firms
- Limited Liability Partnerships (LLPs)
- Indian registered Companies
Product Categories Covered
- Category 1: High-value drugs → Biopharmaceuticals, Complex generics, Patented drugs, Orphan drugs, etc.
- Category 2: Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), Drug Intermediates (DIs) → excluding those already covered under a separate PLI for APIs/KSMs/DIs.
- Category 3: All other drugs not covered under Categories 1 and 2, especially those not manufactured in India.
Financial Incentive Structure
- Basis of Incentive: Given on incremental sales compared to the Base Year (FY 2019–20).
- Tenure of Incentive Payment: Maximum 6 years.
- Rate of Incentive:
- Category 1 & 2: Starts at 10%, gradually reduces to 6%.
- Category 3: Starts at 5%, gradually reduces to 3%.
Eligible Investment Expenditure
Under this scheme, incentives are linked to investment made in:
- New plant, machinery, and equipment
- Research & Development (R&D)
- Transfer of Technology (ToT)
- Product registration
- Construction of building
Why is this Important?
- Encourages Indian companies to move up the value chain from low-cost generics to innovation-driven pharma.
- Reduces import dependence on countries like China for APIs and intermediates.
- Strengthens India’s ambition to become a global pharma hub, ensuring not just self-reliance but also export competitiveness.
✅ In summary: The PLI Scheme for Pharmaceuticals is not just about subsidy—it is about creating long-term capability, global champions, and self-reliance in critical drugs. It combines financial incentives with investment requirements to push Indian pharma into the next league.