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This scheme offers financial incentives to manufacturers of pharmaceutical goods and in-vitro diagnostic medical devices, based on Read More... their increased sales over a base year. Read less

Details

The Indian government is committed to boosting its pharmaceutical sector. The Production Linked Incentive (PLI) Scheme for Pharmaceuticals is a key initiative designed to do just that. It aims to encourage more investment and production within India, helping companies to diversify into high-value products.

What Is This Scheme?

The PLI Scheme for Pharmaceuticals is an initiative by the Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals. It provides financial rewards to selected companies based on how much their sales of eligible pharmaceutical goods and in-vitro diagnostic medical devices increase over a set base year. The Small Industries Development Bank of India (SIDBI) helps manage the scheme.

Who Can Benefit From This Scheme?

This scheme is primarily for Indian manufacturers of pharmaceutical goods. It's divided into different groups (A, B, C, and MSME) with specific investment and revenue requirements, making it accessible to a wide range of companies, from large corporations to small and medium enterprises.

Why This Scheme Is Important

By incentivizing increased production and sales, the scheme helps strengthen India's position as a global pharmaceutical hub. It encourages companies to invest in advanced manufacturing, leading to higher quality products and greater self-reliance in critical medical supplies.

Objective

This scheme offers financial incentives to manufacturers of pharmaceutical goods and in-vitro diagnostic medical devices, based on their increased sales over a base year.

Benefits

Category A Forest Areas (Kanha, Bandhavgarh, Pench Tiger Reserve, Ratapani Tiger Reserve & adjacent National Parks & Sanctuaries)

The beneficiary receives a Capital Subsidy of 20% on the approved fixed capital investment.

The maximum ceiling of the subsidy is ₹1,00,00,000/-.

Category B Forest Areas (Panna & Satpuda Tiger Reserve and adjacent National Parks & Sanctuaries)

The beneficiary receives a Capital Subsidy of 20% on the approved fixed capital investment.

The maximum ceiling of the subsidy is ₹2,00,00,000/-.

Category C Forest Areas (Sanjay Dubri Tiger Reserve, Kuno National Park, Veerangana Durgavati Tiger Reserve, Madhav National Park, Gandhi Sagar, other protected areas, and new entry routes of Category A and B)

The beneficiary receives a Capital Subsidy of 20% on the approved fixed capital investment.

The maximum ceiling of the subsidy is ₹3,00,00,000/-.

Conditions

The unit must remain in continuous operation for at least three years from the date of availing the subsidy.

The unit must submit a self-declaration regarding continuous operation on or before the 15th of April every year.

If the unit closes within 1 year of receipt of subsidy, 80% of the subsidy amount must be refunded.

If the unit closes within 2 years of receipt of subsidy, 60% of the subsidy amount must be refunded.

If the unit closes within 3 years of receipt of subsidy, 50% of the subsidy amount must be refunded.

Sources and references

Guidelines

Eligibility Criteria

To apply for the PLI Scheme for Pharmaceuticals, manufacturers need to meet certain common and group-specific criteria:

Common Eligibility Requirements:

You must be a registered manufacturer of pharmaceutical goods in India.
Your manufacturing activities must involve eligible pharmaceutical products covered under the scheme's three defined categories.
You cannot claim incentives for the same product under this scheme if you are already receiving benefits from the Production Linked Incentive Scheme for Bulk Drugs or any other PLI Scheme.

Group A Applicants:

Your Global Manufacturing Revenue for pharmaceutical goods or in-vitro Diagnostic Medical Devices should be ₹50,000 crores or more in FY 2019-20.
You need to achieve a minimum cumulative investment of ₹1,000 crores over 5 years.
You must achieve a minimum turnover of ₹50 crores from eligible products in the first year (FY 2022-23).

Group B Applicants:

Your Global Manufacturing Revenue for pharmaceutical goods or in-vitro Diagnostic Medical Devices should be between ₹500 crores and ₹5,000 crores in FY 2019-20.
You need to achieve a minimum cumulative investment of ₹250 crores over 5 years.
You must achieve a minimum turnover of ₹10 crores from eligible products in the first year (FY 2022-23).

Group C Applicants:

Your Global Manufacturing Revenue for pharmaceutical goods or in-vitro Diagnostic Medical Devices should be less than ₹500 crores in FY 2019-20.
You need to achieve a minimum cumulative investment of ₹50 crores over 5 years.
You must achieve a minimum turnover of ₹1 crore from eligible products in the first year (FY 2022-23).

Group C (MSME) Applicants:

You must fall under the Micro, Small and Medium Enterprises (MSME) category and meet the criteria for Group C.
You need to achieve the committed investment over a period of 5 years.
You must achieve a minimum turnover of ₹50 lakhs from eligible products in the first year (FY 2022-23).

Continuation Criteria:

To continue receiving incentives from FY 2023-24 onwards, you must achieve at least a 7% growth in sales compared to the previous Financial Year.

How To Apply

Applying for the PLI Scheme for Pharmaceuticals is an online process managed through a dedicated portal.

The application needs to be submitted online via the Project Management Agency (PMA) portal. The exact web address for applications is typically provided by the Ministry or Department.
Once your application is selected, you will need to furnish a Bank Guarantee and an Undertaking.

For the most accurate and up-to-date application link, please refer to the official website of the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.

Documents Required

Audited Financial Statements
Certificate from a Cost Accountant (for Production Cost Certification)
Bank Guarantee (provided after selection)
Undertaking (provided after selection)
Product Registration Documents
Self-Certified Quarterly Review Report

FAQ’s

What is the minimum Global Manufacturing Revenue needed to qualify for Group A under this scheme?

To be eligible for Group A, your company must have generated a Global Manufacturing Revenue of ₹50,000 crores or more from pharmaceutical goods or in-vitro Diagnostic Medical Devices in the Financial Year 2019-20.

How do I claim the incentives once my company is selected for the scheme?

Selected applicants must submit their incentive claims online on an annual basis. The claim needs to be submitted within one month of the closure of each financial year. Additionally, you'll need to provide a self-certified quarterly review report within 30 days of the end of each quarter.

Is the investment made in buying land for a manufacturing unit counted towards the scheme's eligible investment?

No, the cost of acquiring land for setting up your manufacturing unit is not considered eligible investment under this scheme.

For how long will the incentives be provided, and how do the rates change over time?

The incentives are provided on net incremental sales for 6 years (FY 2022-23 to 2027-28). For Category 1 and 2 products, the incentive rate is 10% for the first four years, then 8% for the fifth year, and 6% for the sixth. For Category 3 products, it's 5% for the first four years, 4% for the fifth, and 3% for the sixth.

What is the minimum sales growth I need to show each year to keep getting incentives after the first year?

From Financial Year 2023-24 onwards, you must achieve a minimum sales growth of 7% compared to the previous financial year to be eligible for incentives in subsequent years.

What if my company is an MSME; are there special provisions for us?

Yes, MSMEs that fall under Group C have specific eligibility criteria. They need to achieve a committed investment over 5 years and a minimum turnover of ₹50 lakhs from eligible products in the first year (FY 2022-23).

Which year is used as the base for calculating sales increases and eligibility?

The Financial Year 2019-20 serves as the base year for calculating incremental sales and for determining the pre-qualification eligibility criteria for all applicants.

When do I need to submit the Bank Guarantee after being selected?

After receiving the official approval letter, selected applicants are required to submit the prescribed Bank Guarantee along with an undertaking within two weeks.