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.

What is API?

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

Data: India’s Import from China

• ​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 (PLI) scheme for bulk drugs (APIs)

• 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.

Source: Business Standards