Last Updated on February 26, 2021 by The Health Master
Pharma Industry welcomes PLI Scheme, awaits implementation details
The Union Cabinet’s decision to approve the Production Linked Incentive (PLI) 2.0 Scheme (PLI Scheme) for pharma has been appreciated by the industry and its stakeholders await implementation details.
Ramesh Swaminathan, Chief Financial Officer and Head Corporate Affairs, Lupin said, “The scheme provides for a greater thrust on innovation, development of complex and high tech products including emerging technologies.
It would go a long way in making this sector a truly global one in terms of size and stature by paving the way for a marked shift from commodity generics into a truly technology-heavy industry dealing with the latest technologies for patented products across various frontiers of science.
This would help us to play to our strengths of a young, well-educated workforce harnessing cutting edge technologies for the progress of mankind as well as the country. We eagerly await finer details of the scheme.”
BR Sikri, Chairman, FOPE, and Vice President, BDMA said, “We are very happy that the government of India has announced PLI II Scheme in the shortest time possible. This will boost domestic production as well as the availability of molecules for overseas markets.
The basic guidelines are yet to come which will clarify the investment criteria. On the whole, it will benefit the Consumer because there will be excess availability of products and competition among pharma manufacturers.”
Mahesh Doshi National President, IDMA commented, “On behalf of the industry, we welcome the announcement of approval from the cabinet of PLI II Scheme. We are waiting for further details of scheme implementation.
Certainly, this move will benefit the patient and also give a further boost to Aatmanirbhar Bharat. With this initiative, it will make our country self-reliant in intermediates and APIs.”
“Great intervention by Modi Government at the right time to encourage competition in the pharma sector by announcing PLI 2.0, which should bring down the prices and make healthcare more affordable and accessible under Ayushman Bharat and National Health Mission,” said Prof. Bejon Kumar Misra Founder Patient Safety and Access Initiative.
He further added, “The States should learn from the PLI 1.0 so that they can improve on the infrastructure like more Pharma and Medical Devices Parks to enable existing units to expand, Startups and Entrepreneurs to enter the business and go global in the interest of consumers”.
Vivek Padgaonkar, Independent Healthcare Consultant Former-Director OPPI ( Project & Policy), Former GSK (Sales & Marketing) expressed, “The cabinet has now approved the Production Link Incentive (PLI) Scheme II to incentivise the Indian API industry to invest in the manufacture of APIs, KSMs, and DIs.
This is a step towards self-reliance and the industry must appreciate the speed with which the government has worked to bring PLIs into existence. While the government expects entrepreneurs to set up new units for the identified APIs, KSMs and DIs the disbursement of the incentives will be from the second year onwards for chemical APIs and from the third year onwards for fermentation-based ones.
However, setting up a unit in India takes much longer, due to delays in getting approvals and permissions from several regulatory bodies like the pollution control board and departments connected with the project.”
He recommended that the government should also look into the following:
• Anti-dumping APIs:
Government will not enter into Economic Partnership Agreements and Free Trade Agreements with other countries, enabling producers therein to dump APIs and raw materials into India, even though they are being produced under the PLI Scheme
• Fiscal measures
i) Government will not bring any fiscal measures which will dilute the profitability of the setup units
ii) Eliminate fiscal measures by ensuring that GST is made comprehensive by bringing into its fold five petroleum products, electricity, etc.
“Over a seven-year-period, over which the PLI Scheme will payout incentives, it can support the production of about Rs. 47,364-crore (assuming an average capacity utilisation of 80 per cent).
This will perhaps offer a healthy return on government investment of Rs. 6,940-crore, even without considering the additional tax revenue (direct and indirect, including GST) that will accrue to the government’s kitty.
However, from the industry point of view, the incentive amount may not appear to be significant. The total incentive of Rs. 6,940-crore being offered to new units over the seven-year-period works out to about less than 15 per cent of the turnover likely over the seven years – or about two per cent annually.
Considering, the new project starts delivering a minimum of two years from now, and the incentive amount will be paid out from year 3-10, the amount will be eroded by inflation.
So, the industry cannot afford to rely on subsidies to ensure competitiveness, but must look to inherent strengths stemming from lowering the project costs, improving the timelines of project implementation, reducing operating costs, use of latest techniques and technologies,” added Padgaonkar.
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