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DoP modifies operational guidelines for PLI scheme for pharmaceuticals
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Gireesh Babu, New Delhi
October 25 , 2023
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The Department of Pharmaceuticals (DoP) has released modifications in the operational guidelines for production linked incentive (PLI) scheme for pharmaceuticals elaborating the conditions for annual incentive allocations, clarifying timeline for periodic claims and procedures in case of change in the applicant group structure, among others.
According to the fresh modifications related to the calculation of incentive in the operational guidelines, the annual incentive allocation to each applicant shall be based on conditions including that it is mandatory to the applicant company to avail incentive by achieving eligible sales in the fifth and sixth year under the scheme.
Maximum annual incentive ceiling upto 20 per cent of the total incentive over scheme period for the first four years of the scheme tenure, subject to aggregate maximum 74 per cent of total incentive over scheme period, from FY 2022-23 to FY 2025-26. However, an allocation up to 33 per cent in any one year of the claim period may be made for an applicant, subject to an overall cap of 74 per cent between FY 2022-23 to FY 2025-26.
The allocation in any one of the first four years may be forgone for an applicant based on request of applicant. The balance incentive allocation shall be made in the last two years of the scheme tenure, subject to minimum 10 per cent allocation in FY 2027-28, added the modified guideline.
Application for additional incentive shall be submitted by the applicants in the fifth and sixth year of claim, that is FY 2026-27 and FY 2027-28. Additional incentive to be allocated shall be worked out applicant wise as difference between total incentive due to an applicant on account of eligible sales by the applicant between FY 2022-23 to FY 2025-26 and the total incentive availed of by the applicant subject to a ceiling of 74% for the period FY 2022-23 to 2025-26.
An applicant shall be eligible for additional incentive on incremental sales done in the 5th and 6th year [FY 2026-27 and FY 2027-28]. The incentive rate for additional incentive shall be the same as stipulated in the guidelines for 5th and 6th year, respectively, in each product category based on the year in which it is paid.
In case the unutilized incentive available under the scheme is less than the additional incentive due to all the eligible applicants, the amount shall be allocated on a pro-rata basis, added the corrigendum.
It also fixed the timeline for quarterly claims for disbursement of incentive at 45 days from end of the quarter. For half-yearly claim, the timeline has been mandated as 60 days from the end of the half-year, and annual claims shall be filed along with supporting documents latest by June 15 of succeeding financial year to which the claim pertains, it added.
In the event of a change to the successor-in-interest, any investment previously undertaken by the initial applicant whose approval was sanctioned under the Scheme will be acknowledged when establishing eligibility.
"Furthermore, if a company previously identified as part of the applicant's group, whose investments were included in the computation of minimum cumulative investment under the scheme, ceases to be affiliated with the applicant, as per clause number 2.13 of the scheme guidelines, the investment contributed by such disaffiliated group companies will no longer be counted in the calculation of the minimum cumulative investment for future incentive claims," it added.
To make up for this deficit in the investment, the applicant or the remaining group companies will need to compensate before making any subsequent incentive claims, said the modified guideline.
It may be noted that the DoP launched the PLI scheme for pharmaceuticals in 2021 under the Atma Nirbharta initiative, with a financial outlay of Rs. 15,000 crore over a period of six years. In February, this year, the DoP said that it has selected 55 participants under the scheme, including 20 micro, small and medium enterprises (MSMEs) and it has released the first tranche of incentives amounting to Rs. 166 crore to four selected applicants.
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