According to Industry experts at the event, the government has extended the deadline for applications to manufacture Active Pharmaceutical Ingredients (APIs) under the Production Linked Incentive (PLI) scheme after the Standard Operating Procedures it offered failed to elicit the desired response. The capital of India, New Delhi, has become highly vulnerable to supply chain disruptions, including recurrent lockdowns in China, which is the world's largest manufacturer and exporter of APIs due to its dominance in this industry.
According to the government, the PLI scheme's goal is to strengthen India's manufacturing capabilities by boosting investment and production in the pharmaceutical industry and promoting product diversification into high-value commodities. It also intends to build champions out of India who has the potential to grow on a global scale using leading-edge technology and thereby penetrate the value chains.
A Parliamentary panel recently recommended to the central government to launch the Research Linked Incentive (RLI) Scheme in line with the Production Linked Incentive (PLI) Scheme, which was launched some time ago to promote domestic production of active pharmaceutical ingredients. The panel emphasized the need to promote Research and Development (R&D) and innovation in India's pharmaceutical and medical device sectors. The PLI scheme will undoubtedly help increase the domestic production of 53 bulk pharmaceuticals, for which India is heavily dependent on imports, as well as Key Starting Materials (KSMs), Drug Intermediates (DIs), and APIs.
To lessen reliance on China, the Department of Pharmaceuticals launched three PLI schemes: medical devices (Rs.3,420 cr), pharmaceuticals (Rs.15,000 cr), and bulk medications (Rs.6,940 cr). The government's subsidies, according to the experts, were insufficient to draw the investment needed to start large-scale manufacturing. Around 14 projects totaling Rs.612 crores have been launched in the area of bulk pharmaceuticals. The government is offering incentive rates of 20% for the first year, 15% for the fifth year, and 5% for the sixth year.
According to trade analysts, India used to produce all the APIs it needed on its own, but the closure of those manufacturing facilities was caused by cheaper alternatives from China. After COVID-19 and the Russia-Ukraine War, many nations realized the impact of their over-reliance on China for essential commodities like semiconductors and APIs.
According to ChemAnalyst, Chinese active ingredients are 20% to 30% less expensive than Indian ones, and incentives of up to 20% under PLI might help close the gap.
