- The Production Linked Incentive (PLI) scheme for bulk drugs was launched in 2020 with an outlay of Rs 6,940 crore. It aims to promote domestic manufacturing of critical bulk drugs and reduce India's import dependence.
- Under this scheme, financial incentives are provided to eligible manufacturers of 53 identified critical bulk drugs based on incremental sales over the base year (2019-20). The incentive rates range from 10-20% of incremental sales.
- The PLI scheme for medical devices was also launched in 2020 with an outlay of Rs 3,420 crore. It aims to boost domestic manufacturing and attract large investments in the medical device sector. Financial incentives are provided based on incremental sales of medical devices manufactured in India.
- As of March 2024, the government has approved 27 bulk drug parks and 13 medical device manufacturing plants under these schemes across the country.
- These parks and plants are expected to enable end-to-end domestic manufacturing, reduce import dependence and make India a global hub for bulk drugs and medical devices.
- According to projections, the PLI schemes could lead to incremental production of Rs 46,400 crore for bulk drugs and Rs 38,000 crore for medical devices by 2028. Additional employment generation of 2-3 lakhs is also expected.
- By promoting domestic manufacturing, these schemes will also lead to import substitution, cost competitiveness, resource optimization and sustainability. This will enhance India's long-term capabilities and self-reliance in the pharmaceutical and medical device sectors.
In summary, the PLI schemes, along with creation of dedicated parks and plants, will bolster domestic manufacturing, reduce import dependence, create jobs and enable India to become a global leader in bulk drugs and medical devices. This will also improve the security and resilience of India's pharmaceutical supply chain in the long run.
The PLI scheme represents a strategic investment by the Indian government to build domestic manufacturing capabilities and reduce dependence on imports in critical sectors like pharmaceuticals and medical devices. By providing financial incentives linked to incremental sales, the PLI scheme aims to attract large investments from global and domestic players to set up production facilities and supply chains in India.
The scheme is expected to enable end-to-end manufacturing, right from bulk drugs to formulations and medical devices, across multiple locations in India. This will mitigate risks associated with concentrated production and offshore dependencies. Bulk drug parks and medical device plants inaugurated across India will provide the enabling infrastructure and ecosystem.
In the long run, this has the potential to transform India into a globally competitive manufacturing hub in these sectors. The returns on investment will be multi-dimensional and not just financial. Some of the expected benefits are:
- Import substitution and reduced trade deficit, providing forex savings
- Employment generation and skill development of 2-3 lakh professionals
- Growth of ancillary sectors and MSMEs supporting end-to-end production
- Innovation and R&D in pharmaceuticals and medical technology
- Ensuring reliability and resilience of critical healthcare supply chains
- Cost competitiveness and wider availability of quality medicines and devices
- Better economies of scale and export potential
- Strategic autonomy and self-sufficiency in vital healthcare sectors
Overall, the PLI scheme reflects the government's foresight in encouraging indigenous manufacturing that will secure India's healthcare value chains and national interests over the long term. This has the potential to deliver financial returns, global competitiveness, jobs, innovation and strategic benefits that can uplift many segments of the economy and society.
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