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20% of annual sales as incentive for import substitution of bulk drugs, devices from China

Joe C Mathew     June 2, 2020

The Union government will roll out production linked incentive schemes (PLIS) to reduce import dependency of bulk drugs and medical devices in India. The move will help India reduce dependency on imports of these items from other countries, especially China. While 53 bulk drugs and intermediates - key ingredients that go into the production of pharmaceuticals - that are currently not produced in India will be eligible for PLIS, four target segments in medical devices - implants, radiology and nuclear medical devices, catheters and renal care - have been shortlisted for localisation push under the PLIS for medical devices.

Bulk drugs and intermediates that will be covered under the scheme are meant to produce vitamins, anti-TB drugs, anti-infectives, antibiotics, steroids, etc. According to official sources, the scheme, loosely modelled on the PLIS for large scale electronics manufacturing, may provide 20 percent of annual sales value of bulk drugs and intermediates for the first 6 years for fermentation based products as incentive to chosen manufacturers. The scheme will offer 10 percent incentive for chemical processes based bulk drug manufacturing. In the case of medical devices, an incentive of 5 percent of total sales for five years is what is proposed. However, there will be investment milestones that the companies will have to achieve during this period.

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The detailed guidelines, being worked upon, also talks of the number of products each company can apply for. The government's attempt is to ensure that maximum number of companies can avail the benefits of the programme by allowing just two players in one of the chosen bulk drug segment. In the case of medical devices, six companies in each of the four segments will be eligible.

"A lot of companies are showing interest. We will choose the companies on the basis of a challenge mode selection process", a government official said.

The PLIS is part of a Rs 10,000 crore package the government had announced to boost indigenous bulk drug manufacturing in India. The scheme, which got the Cabinet approval in March was introduced after COVID-19 linked supply chain disruptions exposed India's dependence on raw material imports from China to produce life saving medicines for domestic consumption as well as exports.

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