Govt approves Rs 13K-crore package to boost bulk drugs manufacture

Industry feels India first needs to tap existing capacity before setting up new drugs parks

The Union government on Saturday approved a package comprising four schemes with a total outlay of Rs 13,760 crore to boost the domestic production of bulk drugs and medical devices and exports.

The Union Cabinet chaired by Prime Minister Narendra Modi approved outlay of Rs 9,940 crore and Rs 3,820 crore for bulk drugs and medical devices, respectively, Minister of State for Chemicals and Fertilizers Mansukh Mandaviya told reporters.

The Cabinet also approved a sum of Rs 3,000 crore for the next five years for a scheme to promote bulk drug parks and for financing common infrastructure facilities at three such parks, he added.

A sum of Rs 6,940 crore has been approved for the Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical key starting material (KSM), drug Intermediates and active pharmaceutical ingredients (APIs), Mandaviya said. The PLI scheme will lead to expected incremental sales of Rs 46,400 crore and significant additional employment generation over eight years, he added.

The plan is to develop three mega bulk drug parks in partnership with states. The Centre will provide grants-in-aid to states with a maximum limit of Rs 1,000 crore per park. Financial incentive will be given to eligible manufacturers of 53 identified critical bulk drugs on incremental sales over the base year (2019-20) for a period of six years. Of these drugs, 26 are fermentation-based bulk drugs and 27 are chemical synthesis-based bulk drugs. The rate of incentive will be 20 per cent (of incremental sales value) for fermentation-based bulk drugs and 10 per cent for chemical synthesis-based ones.

Meanwhile, the scheme for promotion of medical device parks will provide a maximum grant-in-aid of Rs 100 crore per park to states. It will have financial implications of Rs 400 crore, Mandaviya said.

“The PLI scheme for promoting domestic manufacturing of medical devices with financial implications of Rs 3,420 crore,” he added. The expenditure to be incurred for the schemes on promotion of medical devices will be for the next five years.

Under the sub-scheme for promotion of medical device parks, common infrastructure facilities would be created at four parks, which is expected to reduce manufacturing costs.

“It will lead to expected incremental production of Rs 68,437 crore over five years,” he said. He added the schemes have potential to generate an additional employment of 33,750 jobs over five years and reduce import of target segments of medical devices.

However, even as the government gears up to reduce import dependence for pharmaceutical raw material and medical devices, the sector said the immediate focus should be on utilising existing capacities. 

Yogin Majmudar, a bulk drug unit owner and head of the bulk drug committee of the Indian Drug Manufacturers’ Association (IDMA), said in the scheme, the support to be extended to brownfield units was not clear. “There can only be an immediate increase in production from these units. Parks are a longer-term solution with a horizon of a minimum of three years,” he said.

Around 40 per cent of installed capacity is estimated to be lying idle, he said.

Majmudar added that environment regulations needed to be tweaked to get faster approvals. The focus should have been on effluent quality and quantity and not on the product portfolio of an API unit. In the announcement there was no mention of that, a major hindrance to quick production, he said.

Rajiv Nath, forum coordinator of Association of Indian Manufacturers of Medical Devices, said, “We are more than hopeful that these schemes announced would help boost local manufacturing and will accelerate medical devices manufacturing as a 'Make in India' enabler, make quality healthcare accessible and affordable for common masses, enable placing India among the top five medical devices manufacturing hubs worldwide and help end the 80-90 per cent import dependence forced upon us and an ever increasing import bill of over Rs 38,837 crore”.