CAA’s Articulate – Schemes for setting up of Bulk Drugs Parks & Medical Devices Parks


Context:

  • The Union Ministry of Chemicals and Fertilizers has launched four schemes of department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country .

More on the news:

  • The schemes have been launched in line with the vision and clarion call for making India Atma Nirbhar in the pharma sector.
  • For this the Government of India has approved four schemes, two each for Bulk Drugs and Medical Devices parks.

Background:

  • 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.
  • Despite these achievements, it is a matter of concern that India is critically dependent on imports for basic raw materials, like Bulk Drugs (Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs)).
    • India Produces a huge number of Generic medicines as well as more than 500 API, still it has to import large quantities of API.
  • Similarly, in the medical devices sector, India is dependent on imports for 86% of its requirements of medical devices.

The salient features of the four schemes are:

Scheme for promotion of Bulk Drug Parks

  • The scheme envisages creation of 3 bulk drug parks in the country with a total financial outlay of the scheme is Rs. 3,000 crore.
  • The grant-in-aid will be 90% of the project cost in case of North-East and hilly States and 70% in case of other States.
    • Maximum grant-in-aid for one bulk drug park is limited to Rs.1000 crore.
  • States will be selected through a challenge method:
    • The States interested in setting up the parks will have to ensure 24*7 supply of electricity and water to the bulk drug units located in the park and offer competitive land lease rates to bulk drug units in the park.
    • The ease of doing business ranking of the state, incentive policies of the State applicable to the bulk drug industry, availability of technical manpower in the state, etc., will also be factored in while selecting the States.
    • The interested States will be scored and ranked on an evaluation criteria, which captures above parameters.
    • The States getting top 3 ranks will be selected and the grant-in–aid will be released to each state in four installments.
    • The selected States will have to complete the park as per the approved Detailed Project Report (submitted by states) within two years of date of release of first installment of grant-in-aid.

Production Linked Incentive (PLI) scheme for promoting domestic manufacturing of Medical Devices

  • The scheme (with a financial outlay Rs.3,420 crore) intends to boost domestic manufacturing of medical devices in four target segments by giving financial incentives on sales to a maximum number of 28 selected applicants for a period of 5 years.
  • Financial incentive will be given at a rate of 5% of the sales of domestically manufactured medical devices.
  • Four target segments are:
    1. Cancer care / Radiotherapy medical devices
    2. Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging devices
    3. Anesthetics & Cardio-Respiratory medical devices including catheters of Cardio Respiratory Category & Renal Care medical devices
    4. All Implants including implantable electronic devices
  • Beneficiaries:
    • Any company registered in India and possessing a minimum net worth (including group companies) of Rs.18 crore is eligible to apply for incentives under the scheme.
    • The applicant can apply for multiple products within one target segment as well as multiple target segments.

Significance:

  • Developing Indian pharmaceutical capacities:
    • Promoting domestic manufacturing of KSMs, DIs and APIs and medical devices will boost domestic manufacturing of bulk drugs, for which India is critically dependent on imports.
  • Financial incentives:
    • To manufacturers selected under the scheme as a fixed percentage of their domestic sales with required level of domestic value addition.
  • Will bring down the cost of production:
    • This is a golden opportunity for the investors since incentivisation to industry and world-class infrastructure support will help in bringing down the cost of production significantly.
  • Create global demand:
    • 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.

Conclusion:

  • 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.