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Regulatory Insights
from India Tax & Regulatory Services
Revised guidelines – PLI Schemes for manufacturing of bulk drugs and medical devices
2 November 2020
In brief
Further to the guidelines issued by the Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals (Department) in July 2020, the Department has recently issued revised guidelines1 on 29 October 2020 in relation to both the Production Linked Incentive (PLI) Schemes to promote domestic manufacturing of medical devices and bulk drugs (Active Pharmaceutical Ingredients/ Key Starting Materials/ Drug Intermediates), in order to liberalise threshold requirements and provide clarifications on certain aspects. The revised guidelines supersede the guidelines previously issued by the Department on 27 July 2020.
The key changes as per the revised guidelines are discussed below.
In detail
Guidelines for PLI Scheme for promotion of domestic manufacturing of critical Key Starting Materials/ Drug Intermediates/ Active Pharmaceutical Ingredients in India
Timelines
Last date for application filing – extended from 23 November 2020 to 30 November 2020.
Incentive
Incentive to be provided on the sale of products – requirement with respect to ‘domestic’ sales has been removed.
Committed investment
• Minimum threshold investment prescribed under the Guidelines for PLI Scheme for promotion of domestic manuf acturing of critical Key Starting Materials (KSM)/ Drug Intermediates (DIs)/ Active Pharmaceutical Ingredients (APIs) in India (guidelines for bulk drugs) has been deleted, and the concept of ‘Committed investment’ has been introduced. Relevant changes to this effect have been made throughout the guidelines for bulk drugs, such as changes to the definition of greenfield investment and net worth requirement, etc.
• The term ‘Committed investment’ has been defined to mean the amount of fresh investment as defined in the guidelines for bulk drugs that the applicant shall commit by declaration at the time of application.
• The requirement in relation to furnishing corresponding multiplier of Committed investment vis-a-vis increased commitment of minimum annual production capacity stands deleted.
Production thresholds
Minimum annual production capacity changed for few KSMs/ DIs/ APIs, are provided in the below table.
1 File No. 31026/16/2020-Policy dated 29 October 2020 and File No. 31026/19/2020-MD dated 29 October 2020
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Name of KSM/ Dl/ API Old limit (Metric Tonnes)
Revised limit (Metric Tonnes)
Neomycin 175 80
Tetracycline 450 200
Para amino phenol 8,000 4,500
Meropenem 10 4
Losartan 80 40
Ciprofloxacin 300 150
Artesunate 35 20
Telmisartan 80 45
Aspirin 2,800 750
Acyclovir 175 75
Bank Guarantee
The amount of bank guarantee that is required to be furnished by the selected applicants has been revised.
Further, conditions under which such bank guarantee can be invoked has been deleted. It has also been clarif ied that a separate bank guarantee will be required to be submitted by the applicant for each such eligible product.
Guidelines for PLI Scheme for promoting domestic manufacturing of medical devices Timeline
• Last date for application filing – extended from 23 November 2020 to 30 November 2020.
• Tenure of the PLI Scheme increased by one year from financial year (FY) 2026-27 to FY 2027-28.
Committed investment
• Minimum threshold investment prescribed under the Guidelines for the PLI Scheme for promoting domestic manuf acturing of medical devices (guidelines for medical devices) has been deleted, and the concept of
‘Committed investment’ has been introduced. Relevant changes to this effect have been made throughout the guidelines for medical devices, such as change in definition of greenfield investment and net worth, etc.
• The term ‘Committed investment’ has been defined to mean the amount of fresh investment as defined in the guidelines for medical devices that the applicant shall commit by declaration at the time of applying under the PLI Scheme.
• Net worth requirement at the time of making application has been aligned with the requirement of Committed investment, and the specific requirement of INR 0.18bn net worth has been eliminated.
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Incremental sales
• The threshold for the minimum incremental sales of manufactured goods has been reduced.
Target segment Old – limit (in INR bn) Revised – limit (in INR bn)
All f our segments of medical devices
Year 1: 1.20 Year 2: 2.40 Year 3: 3.60 Year 4: 4.60 Year 5: 5.60
Year 1: 0.60 Year 2: 1.20 Year 3: 1.80 Year 4: 2.30 Year 5: 2.80
• It has been clarif ied that for the purpose of computation of incentive, the sale of eligible product means the sale of the eligible product manufactured by the applicant in the greenfield project approved and set up under the guidelines for medical devices.
Bank Guarantee
The amount of bank guarantee that is required to be furnished by the selected applicants has been revised.
Further, conditions under which such guarantee can be invoked has been deleted. It has also been clarified that a separate bank guarantee will be required to be submitted by the applicant for each such eligible product.
The takeaways
By issuing these revised guidelines, the Department has clarified various provisions of the existing guidelines and liberalised certain threshold requirements.
Let’s talk
For a deeper discussion of how this issue might affect your business, please contact your local PwC advisor.
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This document does not constitute professional advice. The info rmation in this document has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this document represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before taking any course of act ion or decision, for which they are entirely responsible, based on the contents of this publication. PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information contained within it or for any decisions readers ma y take or decide not to or fail to take.
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