PLI SCHEME FOR IT HARDWARE AND PHARMACEUTICALS
WHY IN NEWS?
- Recently, the Union Cabinet has cleared Production-Linked incentive (PLI) schemes for pharmaceuticals and IT hardware, including laptops, which would cost the government as much as Rs. 22,350 crore.
- Earlier, the government had announced the PLI scheme for medical devices, mobile phones and specified active pharmaceutical ingredients, with a proposed outlay of Rs. 51,311 crore.
- It aims to give companies incentives on incremental sales from products manufactured in domestic units.
- It invites foreign companies to set units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.
IT Hardware Sector:
- The scheme, worth Rs. 7350 crore, will offer 1-4% cash incentives on net incremental sales (over base year 2019-20) for IT products manufactured in India.
- The Target Segments include Laptops, Tablets, All-in-One PCs and Servers.
Duration: 4 years
- India will be well positioned as a global hub for Electronics System Design and Manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT Hardware exports.
- Employment Generation potential of over 1,80,000 (direct and indirect) over 4 years.
- Provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20-25% by 2025.
- The Rs. 6,940-crore PLI scheme implemented in 2020 focuses on the critical bulk drugs, whereas this scheme is likely to focus on other types of bulk drugs.
- It intends to give incentives between 2020-21 and 2028-29 (9 years).
- Drug manufacturers applying for the scheme will have to be registered in India and will be placed into one of three categories based on their Global Manufacturing Revenue (GMR).
Categories of Drugs Targeted by the Scheme:
- It includes biopharmaceuticals, complex generics, patented and orphan drugs, often expensive for which India relies a lot on multinational drug makers.
- It comprises Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs) and Drug Intermediates (DIs).
- It includes other critical repurposed, auto-immune, anti-cancer, anti-diabetic, anti-retroviral, anti-infective and cardiovascular drugs as well as in-vitro diagnostic devices and drugs not manufactured in India.
For First and Second Category:
- 10% of incremental sales value for the first four year of the scheme, followed by 8% for the fifth year and 6% for the sixth year of production under the scheme.
For Third Category:
- 5% of incremental sales value for the first four years, 4% for the fifth year and 3% for the sixth year.
Reduced Dependency on China:
- India’s capabilities in APIs have reduced over the years, mostly due to cheaper alternatives from China.
- The pharmaceutical industry here is currently dependent on the bordering country for nearly 70% of the bulk drugs it imports.
- The Indian pharmaceutical industry is the third-largest globally in terms of the volume term of production and is worth USD 40 billion in value.
- The country contributes 3.5% of total drugs and medicines exported globally.