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Recently, the Union Cabinet has approved the Production Linked Incentive (PLI) Scheme for the pharmaceuticals and IT hardware sectors, entailing an outlay of Rs. 15,000 crore and Rs. 7,350 crore, respectively.
- In line with the vision of Aatmanirbhar Bharat, the move intends to make India a major manufacturing hub in the production of medicines and medical equipment and also laptops, tablets, personal computers and servers.
- These aim to create global champions from India that have the potential to grow in size and scale using cutting edge technology and thereby penetrate global value chains.
PLI for Pharmaceuticals
- Duration: For nine years till 2028-29.
- It will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of a wider range of affordable medicines for consumers.
- It is expected to bring in an investment of Rs. 15,000 crore in the pharmaceutical sector.
- The growth in the sector is expected to add 20,000 direct and 80,000 indirect jobs for both skilled and unskilled personnel.
- It will promote the production of high-value products in the country and increase the value addition in exports.
- It will promote innovation for the development of complex and high-tech products including products for emerging therapies and in-vitro diagnostic devices.
- It will bring self-reliance in important drugs, while improving accessibility and affordability of medical products, including orphan drugs, to the Indian population.
- It has three categories.
- First Category: It will include biopharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry, cell-based or gene therapy drugs, orphan drugs, special empty capsules; complex excipients and phytopharmaceuticals.
- Second Category: It will include active pharmaceutical ingredients and drug intermediates.
- Third Category: It will cover all the drugs that are not captured in the first two, including repurposed drugs, autoimmune drugs, anti-cancer and anti-diabetic drugs.
- Indian Pharmaceutical Industry
- It is the 3rd largest in the world by volume.
- It has a high market presence in several advanced economies such as the US and the European Union (EU).
- It is well known for its production of affordable medicines, particularly in the generics space.
- However, the country is significantly dependent on the import of basic raw materials like Bulk Drugs that are used to produce medicines.
PLI for IT Hardware
- Duration: For four years till 2025.
- Beneficiaries: IT hardware sector such as laptops, tablets, all-in-one PCs and servers.
- Under it, the incentive will be given on net incremental sales of goods manufactured in India for a period of four years.
- It will benefit five major global players and ten domestic champions in the field of IT hardware.
- It will enable domestic value addition in IT hardware to rise from 5-10% at present to 20%-25% by 2025.
- Under the scheme, incentives of 4% to 1% on net incremental sales over the base year (2019-20) will be given to the beneficiary companies.
- It includes an incentive outlay of Rs 7,325 crore and administrative charges of Rs 25 crore.
- It will reduce imports and enhance the development of the electronics ecosystem in the country.
- Currently, 80% of the country’s laptop and tablet demand is met through imports.
- The scheme will provide impetus to domestic value addition for IT hardware which is expected to rise to 20-25% by 2025.
- The scheme has the potential to generate employment for more than 1,80,000 (direct and indirect jobs) over four years.
- The scheme will be part of the umbrella scheme for the Development of Pharmaceutical Industry.
- The objective of the scheme is to enhance India’s manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high-value goods in the pharmaceutical sector.
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Production Linked Incentive
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