Cabinet okays Rs 14,000 crore package to boost domestic manufacturing of bulk drugs
New Delhi, March 21, 2020
The Union Cabinet today approved a Rs 14,000 crore package of schemes to boost domestic manufacturing of bulk drugs in the country that will provide incentives for production of active pharmaceutical ingredients (API) and medical devices and reduce dependence on imports for critical healthcare needs.
The decision has come at a time when the coronavirus pandemic across the world has created hurdles in the imports of bulk drugs and raised the possibility of a shortage of drugs if the crisis is long-drawn.
The package includes a scheme for promotion of three Bulk Drug Parks with common infrastructure facilities with a financial implication of Rs 3,000 crore over the next five years, an official press release said.
A Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical KSMs/Drug Intermediates and APIs in the country with financial implications of Rs 6,940 crore for the next eight years has also been approved.
The Cabinet also approved the decision to develop three mega Bulk Drug parks in India in partnership with States. The Union Government will give grants-in-aid to States with a maximum limit of Rs 1000 crore per Bulk Drug Park.
The parks will have common facilities such as solvent recovery plant, distillation plant, power & steam units, common effluent treatment plant etc., the release said.
A sum of Rs 3,000 crore has been approved for this scheme for the next 5 years. Under the Production Linked Incentive Scheme, a financial incentive 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 6 years.
Out of 53 identified bulk drugs, 26 are fermentation-based bulk drugs and 27 are chemical syntheses based bulk drugs.
Rate of incentive will be 20 % (of incremental sales value) for fermentation-based bulk drugs and 10% for chemical synthesis based bulk drugs. A sum of Rs. 6,940 crore has been approved for next 8 years.
The scheme for promotion of bulk drug parks is expected to reduce the manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs.
The Production Linked Incentive 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 thereby reduce India's import dependence on other countries for critical KSMs/Drug Intermediates and APIs.
It will lead to expected incremental sales of Rs 46,400 crore and significant additional employment generation over 8 years.
The first 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 3 mega Bulk Drug Parks.
The second 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).
Common infrastructure facilities would be created with the financial assistance under the sub-scheme in three Bulk Drug Parks. It is expected to reduce manufacturing cost and dependency on other countries of Bulk Drugs in the country.
The Indian pharmaceutical industry is the third largest in the world by volume. However, despite this achievement, India is significantly dependent on the 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%.
"Continuous supply of drugs is necessary to ensure delivery of affordable healthcare to the citizens. Any disruption in supplies can have a significant adverse impact on Drug Security, which is also linked to the overall economy of the country. Self-sufficiency in the manufacturing of bulk drugs is highly required," the release added.