New Delhi: In a big boost to domestic manufacturing of bulk drug in the country, the government on Saturday announced a Rs 14,000-crore package that would incentivise production of active pharmaceutical ingredient (API) and medical devices in the country and reduce dependence on import for critical healthcare needs.
The COVID-19 outbreak has resulted in complete stoppage of import of bulk drug and API to India. This has created a scare that if the pandemic is long drawn, there could be a shortage of drugs in the country. About 80 per cent of bulk drug used in the country is imported.
As per the decision taken by the Cabinet, four schemes would be introduced to boost production of bulk drugs and API and also increase domestic manufacturing critical medical devices that are in short supply in the country.
Under the first scheme, the government has provided a budget of Rs 3,000 crore that would go into promoting setting up of three bulk drugs parks in states. The state governments will come up with 1000 acres of land for such parks that would create common infrastructure facilities that support bulk drug manufacturing.
Centre will give grants-in-aid to states with a maximum limit of Rs 1,000 crore per park. The parks will have common facilities such as solvent recovery plant, distillation plant, power and steam units and common effluent treatment plant.
Simultaneously, a bulk drug incentive scheme would be run with a total budget of Rs 6,940 crore. This scheme would provide 20 per cent incentive on production cost to investors proposing bulk drug units for a period of four years. The incentive will be 15 per cent in fifth year and 5 per cent from sixth year.
The incentive will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of 6 years. Out of 53 identified bulk drugs, 26 are fermentation based bulk drugs and 27 are chemical synthesis based bulk drugs.
The bulk drug schemes are expected to lead to incremental sales of Rs 46,400 crore and significant additional employment generation over eight years, a government statement said.
The cabinet also approved a scheme on promotion of medical device parks for financing common infrastructure facilities in four Medical Device Parks with financial implications of Rs 400 crore.
It also gave its nod to a production linked incentive (PLI) scheme for promoting domestic manufacturing of medical devices with financial implications of Rs 3,420 crore. The expenditure to be incurred for the schemes will be for the next five years i.e. from 2020-21 to 2024-25.
Under the medical device park scheme, a maximum grant-in-aid of Rs 100 crore per park will be provided to the states. The park will provide financial assistance for creation common infrastructure facilities.
With regard to PLI, an incentive at the rate of 5 per cent of incremental sales over base year 2019-20 will be provided on the segments of medical devices identified under the scheme. The incentive will cover manufacturing of radiology and imaging devices and nuclear imaging devices; anesthetics and cardio-respiratory medical devices, implants, including implantable electronic devices such as cochlear implants and pacemakers.
Medical Device is a growing sector and its potential for growth is the highest among all sectors in the healthcare market. It is valued at Rs 50,026 crore for 2018-19 and is expected to reach to Rs 86,840 crore by 2021-22.
India depends on imports up to an extent of 85 per cent of total domestic demand of medical devices.
