PLI Scheme for Promotion of Domestic Manufacturing of Critical KSMs, Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs)
Background and Context
- Every medicine we consume has an Active Pharmaceutical Ingredient (API) — this is the main chemical molecule that provides the therapeutic effect.
- Example: In an antibiotic tablet, Penicillin is the API.
- To make APIs, industries use Key Starting Materials (KSMs) and Drug Intermediates (DIs).
- Problem: India is heavily dependent on imports—almost 70% of its bulk drug imports come from China.
- This creates a vulnerability in public health security. If imports are disrupted, India’s entire pharma supply chain suffers.
- To overcome this, the government launched the PLI Scheme for KSMs, DIs, and APIs in 2020.
Quick Facts
- Type: Central Sector Scheme (fully funded by the Union Government).
- Purpose: To make India self-reliant in the production of KSMs, DIs, and APIs.
- Implementing Agency: Industrial Finance Corporation of India (IFCI) Ltd.
- Tenure: FY 2020–21 to 2029–30.
Objectives
- Promote large investments in bulk drug manufacturing.
- Reduce import dependence on critical APIs.
- Strengthen India’s pharma sector and ensure long-term health security.
Salient Features
(a) Bulk Drug or API
- It is the active chemical molecule responsible for the therapeutic effect of a drug.
- APIs are the backbone of the pharmaceutical industry.
(b) Scope of the Scheme
- Incentives are given for setting up Greenfield plants.
- There must be minimum 90% domestic value addition.
- The scheme covers 41 identified products in 4 categories, which include all 53 critical APIs.
(c) Eligible Investment
Subsidy is linked to actual investment made in:
- New plant, machinery, and equipment
- Research & Development (R&D)
- Transfer of Technology (ToT)
- Product registration
- Construction of buildings
Target Segments
The scheme identifies two major routes of manufacturing:
- Fermentation-based products → e.g., Penicillin, Streptomycin, niche antibiotics
- Chemical synthesis-based products → Key chemicals and other drug intermediates
Financial Incentives
- Basis of Incentive: Incremental sales over the base year (FY 2019–20).
- Tenure of incentive payment: Maximum 6 years.
- Rate of Incentive:
- Fermentation-based products: Starts at 20%, gradually reduced to 5%.
- Chemical synthesis-based products: Fixed at 10%.
Why is it Important?
- Strengthens India’s position as a pharma manufacturing hub.
- Ensures self-reliance and reduces risks of external dependency.
- Helps India not just supply generic drugs but also control the core raw materials behind them.
- Part of the larger vision of Atmanirbhar Bharat in healthcare.
✅ In summary: This PLI scheme is about securing India’s pharmaceutical backbone by promoting domestic production of APIs, KSMs, and DIs. It focuses on both fermentation-based and chemical synthesis-based products, ensuring incentives for companies to set up new plants, innovate, and reduce reliance on imports.