Cabinet approves schemes to promote drug parks

In some specific bulk drugs, India’s import dependence is 80 to 100 per cent. Here, the schemes will help considerably strengthen the country’s drug security, in turn boosting the economy

March 21, 2020

The Promotion of Bulk Drug Parks scheme will support the financing of common infrastructure facilities in three Bulk Drug Parks with a budget allocation of around US$400 million for the next five years

The Production Linked Incentive (PLI) Scheme will promote local manufacturing of critical KSMs/Drug Intermediates and APIs in the country with a budget of US$920 million for the next eight years

The Indian pharmaceutical industry is the 3rd largest in the world by volume. However, the country is significantly dependent on the import of basic raw materials, or Bulk Drugs that are used to produce medicines

The Production Linked Incentive (PLI) Scheme will lead to expected incremental sales of US$6.1 billion, along with significant additional employment generation peripheral opportunities over eight years

The Union Cabinet, led by Prime Minister Shri Narendra Modi, has approved the Promotion of Bulk Drug Parks scheme to support the financing of common infrastructure facilities in three Bulk Drug Parks with a budget allocation of around US$400 million for the next five years. The Union Cabinet also approved the Production Linked Incentive (PLI) Scheme for promotion of local manufacturing of critical KSMs/Drug Intermediates and APIs in the country with a budget of US$920 million for the next eight years. 

The Indian pharmaceutical industry is the 3rd largest in the world by volume. However, the country is significantly dependent on the import of basic raw materials, or Bulk Drugs that are used to produce medicines. In some specific bulk drugs, the import dependence is 80 to 100 per cent. Here, the schemes will help considerably strengthen India’s drug security, in turn boosting the economy.

Under the Promotion of Bulk Drug Parks scheme, three mega Bulk Drug parks will be developed in India in partnership with States. The Government will give Grants-in-Aid to states with a maximum limit of US$132.5 million 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 scheme is expected to reduce the manufacturing cost of bulk drugs in India and dependency on other countries. The scheme will be implemented by State Implementing Agencies (SIA) to be set up by the respective State Governments.

Under the Production Linked Incentive Scheme, the 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 six years. Out of the 53 identified bulk drugs, 26 are fermentation-based bulk drugs while 27 are chemical synthesis based bulk drugs. The rate of incentive will be 20 per cent (of incremental sales value) for fermentation-based bulk drugs and 10 per cent for chemical synthesis based bulk drugs. The scheme will be implemented through a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals.

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 reducing India’s import dependence on other countries for critical KSMs/Drug Intermediates and APIs. The scheme will lead to expected incremental sales of US$6.1 billion, along with significant additional employment generation peripheral opportunities over eight years.