Govt Releases Guidelines for Bulk Drugs, Medical Devices Production Scheme
New Delhi: Union Minister for Chemicals and Fertilizers Shri DV Sadananda Gowda recently launched four schemes of Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country.
On this occasion, MoS(i/c) for Shipping and MoS for Chemicals & Fertilizers, Shri Amitabh Kant, CEO Niti Ayog, Dr P D Waghela, Secretary, Deptt of Pharmaceuticals were also present.
Speaking on the occasion, Shri Gowda said, "this in line with the vision of Prime Minister Shri Narendra Modi and his clarion call for making India Atma Nirbhar in the pharma sector. For this, the Government of India has approved four schemes, two each for Bulk Drugs and Medical Devices parks. He exhorted the industry and the States to come forward and participate in these schemes."
He added, "India is often referred to as 'the pharmacy of the world' and this has been proved true especially in the ongoing Covid-19 pandemic when India continued to export critical life-saving medicines to needy countries even during the countrywide lockdown. However, despite these achievements, it is a matter of concern that our country is critically dependent on imports for basic raw materials, viz. Bulk Drugs (Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs)) that are used to produce some of the essential medicines. Similarly in the medical devices sector, our country is dependent on imports for 86% of its requirements of medical devices."
Shri Mandavia further elaborated that this is a very important initiative towards further developing Indian pharmaceutical capacities. Giving details of the Guidelines Shri Mandaviya said that the Production Linked Incentive (PLI) schemes for promoting domestic manufacturing of KSMs, DIs and APIs and medical devices will go a long way including to boost domestic manufacturing of 53 bulk drugs, on which India is critically dependent on imports.
The list of 41 products contained in the scheme guidelines will enable domestic production of 53 bulk drugs. Financial incentives will be given to a maximum of 136 manufacturers selected under the scheme as a fixed percentage of their domestic sales of these 41 products manufactured locally with the required level of domestic value addition.
The incentives would be subject to annual ceilings communicated in the approval letter. The incentives would be given for a period of 6 years. In the case of fermentation-based products, the rate of incentive is 20% for the first four years, 15% for the fifth year, and 5% for the sixth year.
In case of chemically synthesized products, the rate of incentive is 10% for all six years. The selected manufacturers shall have to complete committed investment above a threshold investment mandated for each product and achieve a prescribed minimum installed capacity before they are eligible to receive incentives. The threshold investment is Rs 400 crore for four fermentation-based products and Rs 50 crore for ten fermentation-based products. Similarly, threshold investment is Rs 50 crore for four chemically synthesized products, and Rs 20 crore for 23 chemically synthesized products. The minimum installed capacity to be achieved for each of the 41 products is prescribed in the guidelines. The incentives for fermentation-based products would be available from FY 2023-24 i.e. after a two year gestation period during which the selected applicant has to complete the committed investment and install the committed capacity.
For chemically synthesized products the incentives would be available from FY 2022-23 i.e. after a gestation period of one year during which the selected applicant has to make the committed investment and install the committed capacity. Any company, partnership firm, proprietorship firm or a LLP registered in India and possessing a minimum net worth (including group companies) of 30% of the proposed investment is eligible to apply for incentives under the scheme. An applicant can apply for any number of products.
The applicants will be selected on the basis of transparent composite evaluation criteria which include the annual production capacity committed by the applicant and the sale price of the product quoted by the applicant. Applicants quoting low sale price and higher production capacity will get higher marks in the evaluation.
The guidelines are available on the website of the Department of Pharmaceuticals. The salient features of the four schemes are:
The scheme is open for applications for a period of120 days from the date of issuance of guidelines and the approval will be given to the selected applicants within 90 days from the closure of the application window. Applications will be received only through an online portal. The total financial outlay of the scheme is Rs. 6,940 crore.
Scheme for promotion of Bulk Drug Parks: The scheme envisages the creation of 3 bulk drug parks in the country. The grant-in-aid will be 90% of the project cost in case of North-East and hilly States and 70% in the case of other States. Maximum grant-in-aid for one bulk drug park is limited to Rs.1000 crore.
States will be selected through a challenging method. The States interested in setting up the parks will have to ensure assured 24*7 supply of electricity and water to the bulk drug units located in the park and offer competitive land lease rates to bulk drug units in the park. The location of the proposed park from the environmental angle and logistics angle would be taken into account while selecting the States.
The ease of doing business ranking of the state, incentive policies of the State applicable to the bulk drug industry, availability of technical manpower in the state, availability of pharmaceutical/chemical clusters in the state will also be factored in while selecting the States. The interested States will be scored and ranked on evaluation criteria, given in the guidelines, which captures the above parameters. The States getting the top 3 ranks will be selected. The States have to submit their proposal within 60 days of the date of issuance of the guidelines. Selection will be done and in-principle approval will be given to three selected States within 30 days of the last date of submission of proposals.
Thereafter, the 3 selected States will have to submit a Detailed Project Report (DPR) within 180 days of the in-principle approval based on which final approval will be given. The grant-in-aid will be released in four installments. The first three installments will be 30% each and the last will be 10% of the grant-in-aid. The selected States will have to complete the parkas per the approved DPR within two years of the date of release of the first installment of the grant-in-aid. It is envisaged to have a single-window system in these parks for all regulatory approvals under one roof. The creation of a center of excellence is also envisaged to enable an ecosystem for Research and Development. The total financial outlay of the scheme is Rs. 3,000 crore.
Production Linked Incentive (PLI) scheme for promoting domestic manufacturing of Medical Devices: The scheme intends to boost domestic manufacturing of medical devices in four target segments by giving financial incentives on sales to a maximum number of 28 selected applicants for a period of 5 years. A financial incentive will be given at a rate of 5% of the sales of domestically manufactured medical devices. The incentives would be subject to annual ceilings communicated in the approval letter the incentives would be available from FY 2021-22. Four target segments are:-
- Cancer care / Radiotherapy medical devices
- Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging devices
- Anesthetics & including catheters of Cardio-Respiratory Category & Renal Care medical devices
- AII Implants including implantable electronic devices
Any company registered in India and possessing a minimum net worth ( including group companies) of Rs.18 crore (30% of threshold investment of the first year) is eligible to apply for incentives under the scheme. The applicant can apply for multiple products within one target segment as well as multiple target segments. The selected applicants shall have to complete a threshold investment prescribed for each year and achieve a minimum prescribed sale for that year for them to be eligible to receive incentives. The application window is 120 days from the date of issuance of guidelines and the approval thereafter to the selected applicants will be accorded within 60 days from the date of closure of the application window. The applications will be received only through an online portal. The total financial outlay of the scheme is Rs.3,420 crore.
CEO, NITI Ayog, Shri Amitabh Kant said India Produces a huge number of Generic medicines as well as more than 500 API, still, it has to import a large quantity of API. He said the prime minister wants to reduce dependency on imports.
Secretary pharmaceuticals Shri P D Vaghela gave a detailed presentation of the guidelines.
It is expected that these schemes will make India not only self-reliant but also capable of catering to the global demand for the selected bulk drugs and medical devices. This is a golden opportunity for the investors since incentivization to industry and world-class infrastructure support simultaneously will help in bringing down the cost of production significantly. These schemes along with the liberal FDI policy in these sectors and an effective corporate tax rate of about 17% (including surcharge and cess) will give a competitive edge to India in the selected products vis-à-vis other economies.
For more details of the guidelines click on the link below-