Government launches Schemes and announces guidelines paving way for setting up of Bulk Drugs Parks & Medical Devices Parks in the country

Government launches Schemes and announces guidelines paving way for setting up of Bulk Drugs Parks & Medical Devices Parks in the country

Union Minister for Chemicals and Fertilizers has launched four schemes of Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country. Schemes are:

1. Scheme for Promotion of Medical Devices Parks
2. Scheme for Promotion of Bulk Drug Parks
3. Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (Dis), Active Pharmaceutical Ingredients (APIs) in India
4. Production Linked Incentive (PLI) Scheme for Promoting Domestic Manufacturing of Medical Devices

Union Minister said that this in line with the vision of Hon’ble Prime Minister, and his clarion call for making India Atma Nirbhar in pharma sector.

The salient features of the four schemes are:

• 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 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 case of fermentation based products, the rate of incentive is 20% for first four years, 15% for the fifth year and 5% for the sixth year.
• The scheme is open for applications for a period of 120 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 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 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 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 challenge 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 proposed park from 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 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 an evaluation criteria, given in the guidelines, which captures above parameters. The States getting 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 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. 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 date of release of first installment of 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 centre 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. 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& Cardio-Respiratory medical devices 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 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 application window. The applications will be received only through an online portal. The total financial outlay of the scheme is Rs.3,420 crore.

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 incentivisation 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.

The detailed schemes and corresponding guidelines can be accessed at:

• https://pharmaceuticals.gov.in/sites/default/files/Guidelines%20for%20the%20Production%20Linked%20Incentive%20%28PLI%29%20Scheme%20for%20Promoting_1.pdf
• https://pharmaceuticals.gov.in/sites/default/files/Guidelines%20for%20the%20Production%20Linked%20Incentive%20%28PLI%29%20Scheme%20for%20promotion%20of_0.pdf
• https://pharmaceuticals.gov.in/sites/default/files/Guidelines%20of%20the%20Scheme%20Promotion%20of%20Bulk%20Drug%20Parks_1.pdf
• https://pharmaceuticals.gov.in/sites/default/files/Guidelines%20of%20the%20Scheme%20Promotion%20of%20Medical%20Devices%20Parks_1.pdf