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Laxmi Yadav, Mumbai July 29 , 2020
Laghu Udyog Bharati, an association of micro, small and medium enterprises (MSMEs), has urged the Department of Pharmaceuticals (DoP) to do away with threshold investment of Rs. 20 crore proposed in the guidelines for Production Linked Incentive (PLI) scheme announced by the department to boost domestic manufacturing of bulk drugs. This will make pharma MSMEs eligible for availing monetary benefits under PLI scheme.

As per the guidelines for PLI scheme issued by DoP on July 27, 2020, Rs. 20 crore is the threshold investment to become eligible for manufacturing 23 chemically synthesized key starting materials (KSMs), drug intermediates (DIs) active pharmaceutical ingredients (APIs) out of 53 KSMs, DIs and APIs under the scheme.
The 23 products include meropenem, atorvastatin, olmesartan, valsartan, losartan, levofloxacin, sulfadiazine, ciprofloxacin, ofloxacin, norfloxacin, artesunate, telmisartan, aspirin, diclofenac sodium, levetiracetam, carbidopa, acyclovir, carbamazepine, oxcarbazepine, vitamin B6, levodopa, ritonavir and lopinavir.

The maximum number of eligible manufacturers for each product is four. There will be a total of 92 selected applicants for the 23 products.

A total of Rs. 1,380 crore will be disbursed as incentive for these 23 products from fiscal year 2021-22 to fiscal year 2026-27. Every year Rs. 230 crore is proposed to be distributed as incentive.

Each of four eligible manufacturers of each of the 23 products will get an incentive of Rs. 2.5 crore per annum.

Said Amit Chawla, general secretary of Laghu Udyog Bharati Indore unit, MSMEs have played a crucial role in ensuring affordable drugs to consumers. They can also play a significant role in making India self-reliant in bulk drug production.

There are more than 2,000 MSMEs involved in API and drug intermediate manufacturing in the country. Due to Rs. 20 crore investment limit, they are unable to manufacture the selected APIs post approval to make themselves eligible for the PLI scheme, he added.

Besides removing minimum investment cap, the DoP needs to evolve a mechanism for reservation of MSMEs in the PLI scheme, so that they can avail the scheme, said Chawla.

Another drugmaker on condition of anonymity stated that the main objective of the PLI scheme is to make India self-reliant in production of 53 key APIs but DoP has allowed 30 per cent import of these APIs thus defeating the purpose of the PLI scheme to a certain extent.

Currently, India imports nearly 68 per cent of API, by value, from China.

As per the guidelines, the threshold investment is Rs. 50 crore for other four chemically synthesized products. Similarly, Rs. 50 crore is threshold investment for ten fermentation-based products and Rs. 400 crore is threshold investment for four fermentation-based products.

Besides the PLI scheme guidelines, the DoP has also come out with guidelines for setting up of three bulk drug parks in the country with an outlay of Rs.1,000 crore each.

Laghu Udyog Bharati has taken exception to the number of bulk drug parks proposed by the DoP. Chawla said “India is a vast country with 8,500 drug units. The DoP should consider setting up at least five bulk drug parks—one each for Northern, Southern, Eastern, Western and Central regions.”

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