DoP presents draft guidelines for Rs 6500-crore pharma incentive scheme; Details

New Delhi: Through a recent notification, the Department of Pharmaceuticals(DoP) has rolled out draft guidelines for the Rs 6,940 crore Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of identified critical Key Starting Materials (KSMs)/ Drug Intermediates (DIs)/Active Pharmaceutical Ingredients (APIs) in India.

The guidelines were prepared by a technical committee, headed by the Joint Drugs Controller (I), CDSCO Dr. S Eswara Reddy, constituted by DoP on April 17, 2020, after detailed consultations with industry, experts and other relevant stakeholders. On June 13, a meeting was held with all associations of pharmaceutical manufacturers to discussed the draft guidelines.

The PLI scheme intends to boost the domestic production of bulk drugs including key starting materials, drug intermediaries, and active pharmaceutical ingredients for antibiotics, steroids, anti-tuberculosis (TB), and diabetic medication amongst others identified as critical for manufacturing in India.

This came in light of the fact that India is significantly dependent on the import of basic raw materials, viz., API that are used to produce the Finished Dosage Formulations. APIs accounted for 63% of total pharmaceutical imports in the country during 2018-19. India imports APIs largely for economic considerations, thus, to reduce import dependency and to attain self-reliance and drug security, the Government has agreed to provide incentives.

The draft stipulates the quantum of incentives as support under the scheme will be provided for six years in case of fermentation-based products and five years for chemically synthesized products. The rate of incentive for fermentation products for the first four years (2022-2023 to 2025-2026) would be 20%, 2026-27- 15%, and 2027-28-5%. The rate of incentive for chemically synthesized products for the entire scheme (2021-2022 to 2025-2027) would be 10%.

The draft specified further details as support under the scheme shall be provided only to manufacturers of critical KSMs/Drug Intermediates and APis in India.

"Eligibility shall be subject to a threshold to incremental investment to manufacturing critical KSMs/Drug Intcrmediatcs and APIs (as distinct from traded critical KSMs/Drug Intermediated and API)," adding that "eligibility under the scheme shall not affect eligibility under any other scheme and vice-versa."

The scheme is applicable only for greenfield projects.

The tenure of the scheme will be for a period of eight years from 2020-2 to 2027-28 subsequent to the base year. The Scheme shall be open for applications for a period of 4 months. The application window may be reopened if the initial round does not have enough applications.

The financial year 2019-20 shall be treated as the base year for computation of incremental sales of identified critical KSMs//Drug intermediates and APIs. A total outlay of Rs 6940 crore will be provided as incentive during the tenure of the scheme, the draft added.

The notification further elaborated on the basis of computation stating that assessment of incremental investment and sales of manufactured KSMs/Drug intermediates and APIs shall be based on details furnished to the Departments / Ministries / Agencies and Statutory Auditor certificates.

Besides, functional guidelines will he issued DoP in consultation with concerned Departments / Ministries.

Mentioning about the approval and disbursement process, the draft quotes; "Application under the Scheme can be made by any company registered in India."

An initial application, complete in all aspects, will have to be submitted before the due date. An acknowledgment will be issued after the initial scrutiny of the application. The acknowledgment shall not be construed as approval under PLI Scheme.

As per the draft, "Eligible applications will be appraised on an ongoing basis and considered for approval. Incentive shall be released to eligible applicants, meeting the required thresholds and whose disbursement claims are found to be in order."

The Scheme shall only be applicable for target segments of critical KMS/Drug intermediates and APIs. Target segments of critical KSMs/Drug intermediates and APIs as stated in the draft reads;

I. Fermentation Based 04 KSMs/Drug Intermediates and corresponding APIs

• Penicillin G/ 6-Amino Penicillanic Acid (6-A PA)
• Cephalosporin C/ 7-Amino Cephalosporanic Acid (7-At"A)
• Erythromycin Thiocyanate/ TIOC
• Potassium Clavulanate

II. Fermentation Based 10 Niche KSMs/Drug intermediates and corresponding APIs

• Cyclins (Tetracyclirie. Oxycyclinc, Doxyxcline)
• Aminoglycosidcs (Gentamycin)
• Am inoglycosides (Ncomycin)
• Am inoglycosides (Streptom}cin)
• Steroids (Retamethasonc)
• Stcroids (Dexamethasone)
• Steroids (Prednisolone)
• Anti 7 h (R ifampicin)
• Vitamins and Nutraccuticals (V itamin h6)
• Vitam ins and N utraccuticals (V ilam in D I )

III. Chemical Synthesis Based 04 XSMs/Drug intermediates and corresponding APIs (with backward integration)

• Dicyandiainide (DC'DA)
• Para-aminophenol
• 2-Methyl-5N itro-In idazole (2-MNI) including lix idazoles.
• l , I C'yclohexanc Diacctic Acid (C DA)

IV. Other Chemical Synthesis Based 23 KSMs/Drug Intermediates and corresponding APIs (with backward integration)

In order to ensure drug security in the country, a Drug Security Committee constituted by the Department of Pharmaceuticals collated the details of KSMs/APIs imported in the country and identified 58 KSMs/APIs for which the country is heavily dependent on imports.

DoP further constituted a technical committee to recommend government support in terms of incentives required to be provided to the indigenous pharmaceutical industry to ensure drug security in the country.

Committee made various recommendations and also identified 53 KSMs/APIs based on the therapeutic criticality, essentiality, technology involved, and feasibility to manufacture indigenously. A list of 53 identified KSMs/APIs reads;

The guidelines will soon be forwarded to NITI Aayog for consideration. Thereafter, the final guidelines will be released in July.

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