Production Linked Incentive Scheme for Pharmaceuticals (PLI)

As a new MSME business owner in the pharmaceutical industry, you’re always looking for ways to grow and compete globally. The Production Linked Incentive (PLI) Scheme for Pharmaceuticals is designed to facilitate such growth. The scheme aims to enhance India’s manufacturing capabilities, increase investment, diversify production to high value goods, The scheme was launched under the “Atmanirbhar Bharat” strategy” it seeks to create global champions using cutting edge technology & to integrate Indian manufacturers with global value chains. The scheme targets biopharmaceuticals, complex generics, patented drugs, APIs and more.

What is the PLI Scheme for Pharmaceuticals?

The PLI Scheme for Pharmaceuticals was officially approved on 24 February 2021 by the Union Cabinet and it was officially launched shortly thereafter, with a financial outlay of ₹15,000 crore and a production tenure from FY 2022-23 to FY 2027-28. This scheme is distinct from the earlier PLI Scheme for Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs), which was launched on 20 March 2020

Objectives of the PLI Scheme for Pharmaceuticals

• To foster investment in pharmaceutical sector
• To enhance global competitiveness & penetrate into global value chains
• To reduce import dependency
• To improve product diversity and boost adherence to international quality standards
• To promote domestic manufacturing and job creation
• To support innovation in R&D and development of critical drugs & APIs / KSMs

Key Features of the PLI Scheme for Pharmaceuticals

• The scheme is valid from FY 2020-21 to FY 2028-29.
• The gestation period is FY 2021-22, during which you set up or expand your manufacturing.
• Incentives are based on incremental sales of eligible products over the base year (2019-20).
• There is no specified interest rate, as this is not a loan scheme but a direct incentive.
• The scheme covers both MSMEs and larger companies, with special provisions for MSMEs.
• Eligible investments include plant, machinery, R&D, technology transfer, product registration, and building infrastructure.
• The scheme supports a wide range of pharmaceutical products, including high-value drugs and in vitro diagnostic devices.

Financial Assistance Offered Under the Scheme

You can receive direct financial incentives based on your incremental sales and investments. Here’s how the assistance works:

• Incentive Rate: Ranges from 3% to 10% on incremental sales, depending on the product and applicant group.
• Incentive Period: 6 years (FY 2022-23 to FY 2027-28).
• Maximum Incentive: Varies by applicant group and product category.

Note:

• The incentive is calculated on the incremental sales of eligible products compared to the base year.
• Eligible investments include new plant and machinery, R&D, technology transfer, product registration, and building (with certain limits).

Eligibility Criteria for the PLI Scheme for Pharmaceuticals

Eligibility

As a new MSME owner, you are eligible if:

• You are a Proprietary Firm, Partnership Firm, LLP, or Company registered in India.
• Your business is registered as an MSME with the Ministry of MSME.
• You manufacture eligible pharmaceutical products listed under the scheme.
• You commit to the minimum investment required for your group.
• Your business is not declared bankrupt, repayment defaulters, or reported as fraud by any bank or financial institution.
• You have the necessary regulatory approvals (such as World Health Organisation Good Manufacturing Practices (WHO-GMP) certification or licenses from Central Drugs Standard Control Organisation (CDSCO) or State Licensing Authority (SLA).
• You submit all required documents and pay the application fee.

Non-eligibility

You are NOT eligible if:

• Your business is declared bankrupt, pending repayments or involved in financial fraudulent activities
• You are reported as a fraud by any bank or financial institution.
• You do not manufacture the eligible products listed under the scheme.
• You fail to commit the minimum required investment.
• You lack the necessary regulatory approvals or certifications.
• You do not submit the required documents or pay the application fee.

Documents Required for the PLI Scheme for Pharmaceuticals

• Application form (as per Appendix K of the guidelines)
• MSME registration certificate
• Proof of business registration (Proprietorship/Partnership/LLP/Company)
• Audited financial statements for FY 2019-20
• Details of eligible products and manufacturing facilities
• Regulatory approvals (World Health Organisation Good Manufacturing Practices (WHO-GMP) certification or licenses from Central Drugs Standard Control Organisation (CDSCO)
• Investment commitment details
• Undertakings as per Appendix E and G of the guidelines
• Application fee payment receipt

How to Apply for the PLI Scheme for Pharmaceuticals

Step 1: Download the application form from the Department of Pharmaceuticals website or refer to Appendix K of the guidelines.

Step 2: Fill in all required details, including information about your business, eligible products, and investment plans.

Step 3: Gather all supporting documents, including MSME registration, financials, and regulatory approvals.

Step 4: Prepare the required undertakings (Appendix E and G).

Step 5: Pay the non-refundable application fee as specified in the guidelines.

Step 6: Submit your complete application and documents to the Project Management Agency (PMA) within the application window.

Step 7: Await acknowledgement and further communication from the PMA regarding your application status.

Benefits of the PLI Scheme for Pharmaceuticals

• Direct Financial Incentives
  You get cash incentives based on your incremental sales, which directly boosts your profitability.
• Technology Upgradation
  The scheme encourages you to invest in state-of-the-art technology and R&D, helping you stay competitive.
• Global Market Access
  By supporting high-value and innovative products, the scheme helps you tap into international markets.
• MSME Focus
  Special provisions and reserved slots for MSMEs ensure you get a fair chance to participate and grow.
• Job Creation
  As your business expands, you create more jobs and contribute to the local economy.

Real-World Examples of the PLI Scheme for Pharmaceuticals

• A small pharma company in Gujarat expanded its plant to manufacture high-value cancer drugs, using PLI incentives to fund new machinery.
• An MSME in Hyderabad received PLI support to start producing innovative diagnostic test kits, helping it enter the export market.
• A family-owned business in Himachal Pradesh upgraded its technology and earned WHO-GMP certification, thanks to the scheme’s financial assistance.
• A startup in Maharashtra developed a new antibiotic formulation and used PLI funds to cover R&D and regulatory costs.
• A medium enterprise in Tamil Nadu diversified into making critical vaccines, with PLI incentives making the investment possible.

Related Government Support Plans with the PLI Scheme for Pharmaceuticals

Final Words

The PLI Scheme for Pharmaceuticals is a fantastic opportunity for you as a new MSME owner to scale up, innovate, and become a global player. By understanding the eligibility, preparing the right documents, and applying on time, you can unlock significant financial and strategic benefits for your business.