Cabinet takes decisions to promote manufacturing of critical KSMs, APIs

The Union Cabinet has approved a scheme for promotion of bulk drug parks for financing common infrastructure facilities in three such parks.

It has also approved production-lined incentive (PLI) scheme for promotion of domestic manufacturing of critical KSMs (key starting material)/drug intermediates and APIs in the country.

The decisions, aimed at reducing dependence on imports, have come amid threat of coronavirus spread that has impacted supply chains from China.

India imports APIs (active pharmaceutical ingredients), intermediates and KSMs from China.

An official release said the cabinet decision entails developing three mega bulk drug parks in India in partnership with states. The government will give grants-in-aid to states with a maximum limit of Rs. 1000 crore per park.

The parks will have common facilities such as solvent recovery plant, distillation plant, power and steam units and common effluent treatment plant. A sum of Rs 3,000 crore has been approved for this scheme for next five years. The scheme is expected to reduce the manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs.

The scheme will be implemented by State Implementing Agencies (SIA) to be set up by the respective state governments and the target is to set up three mega Bulk Drug Parks.

Referring to production-linked incentive scheme, the release said that financial incentives will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of six years. Of 53 identified bulk drugs, 26 are fermentation-based bulk drugs and 27 are chemical synthesis based bulk drugs.

It said that 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 bulk drugs. A sum of Rs. 6,940 crore has been approved for next eight years.

The scheme intends to boost domestic manufacturing of critical KSMs/drug Intermediates and APIs by attracting large investments in the sector to ensure their sustainable domestic supply and reduce India's import dependence on other countries. .

It will lead to expected incremental sales ofRs. 46,400 crore and significant additional employment generation over eight years.

The scheme will be implemented through a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals. The Scheme will be applicable only for the manufacturing of 53 identified critical bulk drugs (KSMs/Drug Intermediates and APIs).

The Indian pharmaceutical industry is third-largest in the world by volume but India is significantly dependent on import of basic raw materials - bulk drugs that are used to produce medicines.

In some specific bulk drugs, the import dependence is 80 to 100 per cent.

The release said that the continuous supply of drugs is necessary to ensure delivery of affordable healthcare to the citizens.

It said any disruption in supplies can have a significant adverse impact on drug security, which is also linked to the overall economy of the country and self-sufficiency in manufacturing of bulk drugs was needed.

The scheme relating to Bulk Drug Parks will have a financial implication of Rs 3,000 crore for the next five years and Production Linked Incentive (PLI) Scheme of Rs 6,940 crore for the next eight years.