Production-linked incentive (PLI) scheme for bulk drugs (APIs)

Context:

The production-linked incentive (PLI) scheme for bulk drugs (APIs) has boosted local production of some key APIs, However, it would take at least 5-7 more years before India can see tangible results.

Active Pharmaceutical Ingredient (API) is the biologically active component of a drug product (tablet, capsule, cream, injectable) that produces the intended effects.

Currently, China is the global leader in the production and export of APIs, which is around 20 percent of the world’s API production.
The Indian pharmaceutical industry is the 3rd largest in the world by volume and 14th in value. India contributes 3.5% of total drugs and medicines exported globally.
However, India significantly depends on importing some of the basic raw materials, viz., bulk drugs used to produce the finished dosage formulations.
India imports bulk drugs largely for economic considerations. Bulk drugs accounted for around 63% of the total pharmaceutical imports in the country.
Data from the Pharmaceutical Exports Promotion Council (Pharmexcil) shows India imported $3.18 billion worth of APIs and intermediates from China in 2022-23, up 1.74 percent from the previous year.
In 2021-22, India had imported $3.12 billion worth of APIs and intermediates from China, which was up 19.5 percent from 2020-21.
Therefore, the growth rate has slowed, but the imports continue at similar levels.
On the other hand, India’s imports of bulk drugs and intermediates worldwide (overall) came down by 4.54 percent to $4.5 billion.
This is in contrast to the previous year when they had grown by almost 23 percent to $4.7 billion.

Production-linked incentive

The pharmaceuticals department rolled out a PLI scheme for bulk drugs with an outlay of Rs 6,940 crore.
Objective: The scheme intends to boost domestic manufacturing of identified KSMs, Drug Intermediates and APIs by attracting large investments in the sector, thereby reducing India’s import dependence on critical APIs.
Scope: Under the Scheme, financial incentives shall be given based on sales made by selected manufacturers for 41 products.
The scheme offers incentive rates of 20 percent for the first year, 15 percent for the fifth year, and 5 percent for the sixth year.
As of February, around 22 projects to make key APIs came up under the PLI scheme. These units have a total installed capacity above 33,000 tonnes.