Union Minister for Chemicals and Fertilizers Shri DV Sadananda Gowda has launched four schemes of Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country .
Four schemes, two each for Bulk Drugs and Medical Devices parks, were launched yesterday.
Speaking on the occasion, Shri Gowda said, India is often referred to as ‘the pharmacy of the world’ and this has been proved true especially in the ongoing Covid-19 pandemic when India continued to export critical life saving medicines to needy countries even during the countrywide lockdown.
However, despite these achievements, it is a matter of concern that our country is critically dependent on imports for basic raw materials, viz. Bulk Drugs (Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs)) that are used to produce some of the essential medicines. Similarly in medical devices sector, our country is dependent on imports for 86% of its requirements of medical devices.
The list of 41 products contained in the scheme guidelines will enable domestic production of 53 bulk drugs. Financial incentives will be given to a maximum of 136 manufacturers selected under the scheme as a fixed percentage of their domestic sales of these 41 products manufactured locally with required level of domestic value addition.
The incentives would be subject to annual ceilings communicated in the approval letter. The incentives would be given for a period of 6 years. In case of fermentation based products, the rate of incentive is 20% for first four years, 15% for the fifth year and 5% for the sixth year.
In case of chemically synthesised products, rate of incentive is 10% for all six years. The selected manufacturers shall have to complete committed investment above a threshold investment mandated for each product and achieve a prescribed minimum installed capacity before they are eligible to receive incentives.
Threshold investment is Rs 400 crore for four fermentation based products and Rs 50 crore for ten fermentation based products. Similarly, threshold investment is Rs 50 crore for four chemically synthesised products, and Rs 20 crore for 23 chemically synthesised products.
Minimum installed capacity to be achieved for each of the 41 products is prescribed in the guidelines. The incentives for fermentation based products would be available from FY 2023-24 i.e. after a two year gestation period during which the selected applicant has to complete the committed investment and install the committed capacity.
For chemically synthesised products the incentives would be available from FY 2022-23 i.e. after a gestation period of one year during which the selected applicant has to make the committed investment and install the committed capacity.
Any company, partnership firm, proprietorship firm or a LLP registered in India and possessing a minimum net worth (including group companies) of 30% of proposed investment is eligible to apply for incentives under the scheme. An applicant can apply for any number of products.
The applicants will be selected on the basis of a transparent composite evaluation criteria which include the annual production capacity committed by the applicant and the sale price of the product quoted by the applicant. Applicants quoting low sale price and higher production capacity will get higher marks in the evaluation.
The guidelines are available on the website of the Department of Pharmaceuticals.
It is expected that these schemes will make India not only self-reliant but also capable of catering to the global demand for the selected bulk drugs and medical devices.
This is a golden opportunity for the investors since incentivisation to industry and world-class infrastructure support simultaneously will help in bringing down the cost of production significantly.
These schemes along with the liberal FDI policy in these sectors and an effective corporate tax rate of about 17% (including surcharge and cess) will give a competitive edge to India in the selected products vis-à-vis other economies.
