Budget 2026: Pharma dept prescribes PLI boost for bulk drug output

FY27 PLI scheme allocation rises 2.24%, aiming to add 500 MT to domestic API production

The Department of Pharmaceuticals (DoP) plans to boost production under its production-linked incentive (PLI) schemes for bulk drugs, medical devices, and pharmaceuticals in 2026-27 (FY27), with the schemes receiving a 2.24 per cent increase in allocation this year.

 

Budget Estimates (BE) for FY27 peg the combined allocation for the three schemes at ₹2,499.84 crore, up from ₹2,444.93 crore in 2025-26 BE.

 

According to Budget documents reviewed by Business Standard, DoP aims to add 500 metric tonnes (MT) per annum of manufacturing capacity for bulk drugs in FY27, bringing total production to drugs worth ₹1,250 crore this year.

 

The scheme focuses on domestic production of critical active pharmaceutical ingredients (APIs) used in essential drugs for which there are no alternatives, reducing supply disruption risks caused by over-reliance on a single source.

 

This announcement comes days after the Centre introduced a minimum import price for APIs such as penicillin-G, amoxicillin, and 6-APA (6-aminopenicillanic acid) to counter aggressive undercutting and dumping by Chinese manufacturers.

 

The department is also targeting production of drugs worth ₹1.08 trillion in FY27 under the PLI scheme for pharmaceuticals not covered by the bulk drugs scheme. This marks an increase from the ₹90,000 crore production target last year, incentivising high-value medicines such as biopharmaceuticals, complex generics, patented drugs or drugs nearing patent expiry, autoimmune treatments, and anti-cancer drugs.

 

Under the two schemes, cumulative sales of ₹3.19 trillion have been reported by approved pharmaceutical applicants since the scheme’s inception in 2019 till September 2025, according to DoP.

 

The department also plans to commission three new medical device projects, aiming for total sales of ₹4,000 crore under the PLI scheme for domestic manufacturing of such devices.