Govt notifies incentive scheme for local API manufacturing to cut imports

On Tuesday, the central government had notified a Rs 6,940-crore production linked incentive scheme to boost local bulk drug manufacturing and further reduce dependence on imports. Around 53 active pharmaceutical ingredients (APIs) — covering 41 products — have been identified by the government, for which companies will be eligible for financial incentives, provided they set up indigenous greenfield manufacturing.

According to a government notification, bulk drugs accounted for 63 per cent of total pharmaceutical imports in the country in 2018-19. “The Indian pharmaceutical industry is the third largest in the world by volume and 14th largest in terms of value. India contributes 3.5 per cent of total drugs and medicines exported globally. Despite these achievements, India is significantly dependent on import of some basic raw materials, viz., bulk drugs used to produce finished dosage formulations,” it read.

India imports bulk drugs largely for economic reasons. Chinese bulk drugs are cheaper by 25-30 per cent on average, compared to domestic products. However, the recent Covid-19 pandemic and escalation at the border have exposed India’s vulnerability in this area. One will have to invest Rs 20 crore to set up a new facility — this may be on the premises of an existing manufacturing plant and make the selected bulk drugs to avail of the scheme.

Industry sources felt the government needed to tap into the idle capacity of existing API units. “Around 35-40 per cent of the capacity is sitting idle. The environment ministry’s blanket permission will be subject to complying permitted pollution load norms,” observed an industry insider.

The government also notified a scheme to promote bulk drug parks. For selected parks, financial assistance to the tune of 70 per cent of the project cost of common infrastructure facilities will be provided. In the case of Northeast states and hilly states (Himachal Pradesh, Uttarakhand, Union Territory of Jammu & Kashmir, and Union Territory of Ladakh), financial assistance will be 90 per cent of the project cost. The maximum assistance under the scheme for one bulk drug park will be limited to Rs 1,000 crore. The total financial outlay of the scheme is Rs 3,000 crore.