Cabinet passes a policy to promote manufacture and growth of bulk drugs

The Union Cabinet on Friday passed a policy to promote the manufacture and growth of bulk drugs, sources said. The government is working on creating an ecosystem that would boost local manufacturing and reduce dependence on China for raw materials. A policy on medical devices, too, is on the anvil.

An announcement on the matter is expected over the weekend, the source added. While the finer details of the policy are yet to be revealed, it is learnt that it would incentivise large-scale manufacturing in the country. 

“The idea is to promote investments in the sector. The Department of Pharmaceuticals (DoP) has been working on the plan for some time and it has also made presentations to the Prime Minister’s Office (PMO) recently,” said an industry source.

He added that the NITI Aayog, too, had been closely involved in drafting the policy. The government is planning to create a corpus of Rs 3,000-5,000 crore for building an ecosystem of bulk drug manufacturing. 

This could be achieved through levying a cess on bulk drug imports, and some central funding.

A senior official in the government said that the scheme would entail benefits like cheap power, water, assistance on effluent treatment, technological innovation, among other things. “These incentives would be given to large-scale units. Anyone looking to invest close to Rs 500 crore would be eligible for the same. Only economies of scale can ensure cheaper prices,” he added.

The idea is to have only a few clusters in India that would house large-scale units. These could be developed through special purpose vehicles (SPVs) and would offer plug-and-play infrastructure for those who buy space. The SPV would also secure the necessary environmental clearances, a major roadblock to growth.

Moreover, the government has identified 38-40 key bulk drugs for which India is heavily dependent on China. Preference would be given to units that wish to manufacture these.