production-linked-incentive-pli-scheme

Context: The Department of Pharmaceuticals had launched a Production Linked Incentive (PLI) Scheme for promotion of their domestic manufacturing.

  • It has an objective to attain self-reliance and reduce import dependence in critical Bulk Drugs - 
    • Key Starting Materials (KSMs)/ Drug Intermediates and 
    • Active Pharmaceutical Ingredients (APIs) in the country. API (Active Pharmaceutical Ingredient) means the active ingredient which is contained in medicine. For example, an active ingredient to relieve pain is included in a painkiller.
  • It aims to set up Greenfield plants with minimum domestic value addition in four different Target Segments for the period 2020-21 to 2029-30.

Need: Import dependency

  • The Indian pharmaceutical industry is the 3rd largest in the world by volume.

  • It has high market presence in several advanced economies such as the US and EU. 

  • The industry 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, viz., Bulk Drugs that are used to produce medicines. In some specific bulk drugs, the import dependence is 80 to 100%.

Production Linked Incentive (PLI) Scheme

  • Under the new PLI scheme, companies that set up new mobile and specified equipment manufacturing units or expanded their present units would get incentives of 4-6 per cent on incremental sales from goods made in India.
  • The total incentive to be given to each company will be decided by an empowered committee.
    • It will have secretaries from the Department of Economic Affairs, Department of Expenditure, Department of Revenue, Department for Promotion of Industry and Internal Trade, Directorate General of Foreign Trade, apart from the MeitY secretary and the CEO of the Niti Aayog. 
  • Duration: It will cover target segments that are manufactured in India for a period of five years.

PLI Scheme for IT hardware 

  • It will cover devices such as  laptops, tablets, all-in-one PCs and servers. 
  • An incentive will be given on net incremental sales of goods manufactured in India for a period of four years.
  • Benefits:
    • It will benefit five major global players and ten domestic champions in the field of IT hardware.
    • It will enhance the development of the electronics ecosystem in the country
    • Generate employment for more than 1,80,000 (direct and indirect jobs) over four years.
    • provide impetus to domestic value addition for IT hardware which is expected to rise to 20-25% by 2025.
  • Significance: This is an important segment to promote manufacturing under AtmaNirbhar Bharat as there is huge import reliance for these items at present.

The PLI scheme for pharmaceuticals:

  • Duration : From 2020-21 till 2028-29.
  • Benefits:
    • benefit domestic manufacturers
    • availability of a wider range of affordable medicines for consumers
    • bring investment of ₹15,000 crore in the pharmaceutical sector.
    • promote the production of high-value products in the country 
    • increase the value addition in exports. 
    • help create employment 
    • add 20,000 direct and 80,000 indirect jobs for both skilled and unskilled personnel
    • create global champions from India that have the potential to grow in size and scale using cutting edge technology 
    • penetrate global value chains
    • promote innovation for development of complex and high-tech products including products for emerging therapies and in-vitro diagnostic devices 
    • self-reliance in important drugs
    • improving accessibility and affordability of medical products, including orphan drugs.