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India to Boost Domestic Manufacturing of Medical Devices with Financial Incentives on Sales

India poised to become self-reliant in High-end medical devices

New Delhi: Union Minister for Chemicals and Fertilizers, DV Sadananda Gowda launched four schemes of Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country. He exhorted the industry and the States to come forward and participate in these schemes. MoS for Shipping and MoS for Chemicals & Fertilizers, Amitabh Kant, CEO Niti Ayog, Dr P D Waghela, Secretary, Dept of Pharmaceuticals were also present on the occasion.

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 six years. In case of fermentation based products, the rate of incentive is 20 per cent for first four years, 15 per cent for the fifth year and 5 per cent for the sixth year.

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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.

Mandavia said that this is a very important initiative towards further developing Indian pharmaceutical capacities. Giving details of the Guidelines  Shri  Mandaviya  said that the Production Linked Incentive (PLI) schemes for promoting domestic manufacturing of KSMs, DIs and APIs and medical devices will go a long way including to boost domestic manufacturing of 53 bulk drugs, on which India is critically dependent on imports.

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.

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

The scheme 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 per cent of the sales of domestically manufactured medical devices. The incentives would be subject to annual ceilings communicated in the approval letter the incentives would be available from FY 2021-22.

Four target segments are :-

  • Cancer care / Radiotherapy medical devices
  • Radiology & Imaging medical devices (both ionizing & non-ionizing   radiation products) and Nuclear Imaging devices
  • Anesthetics & Cardio-Respiratory medical devices including catheters of Cardio Respiratory Category & Renal Care medical devices
  • AII Implants including implantable electronic devices

Any company registered in India and possessing a minimum net worth ( including group companies) of Rs.18 crore (30% of threshold investment of first year) 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. The selected applicants shall have to complete a threshold investment prescribed for each year and achieve a minimum prescribed sale for that year for them to be eligible to receive incentives. The application window is 120 days from the date of issuance of guidelines and the approval thereafter to the selected applicants will be accorded within 60 days from the date of closure of application window. The applications will be received only through an online portal. The total financial outlay of the scheme is Rs.3,420 crore.

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 per cent (including surcharge and cess) will give a competitive edge to India in the selected products vis-à-vis other economies.

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