Updated on March 06, 2025 01:44:53 PM
The Production Linked Incentive (PLI) Scheme for Pharmaceutical Sector is designed to promote India as a global manufacturing hub for high-value drugs, APIs, and new generation medicines. The aim of the PLI Scheme for Pharmaceutical Sector is achieved since providing performance-based incentives increases the scale of production, accessing new technologies, and enhances the overall pharmaceutical value chain domestically. The PLI Scheme for Pharmaceutical Sector also aims at promoting the development of technology, to lure investors and to extend the global value chain outreach of India. With an aim of creating employment and enhancing export, the PLI Scheme for Pharmaceutical Sector is aimed at supporting the Indian manufacturers to scale up operations, incorporate technology and emerge as competitive players in the world market to ensure a strong, reliable healthcare infrastructure in the long term.
The PLI Scheme for Pharmaceutical Sector is an initiative to increase manufacturing capacity of India in the segment of high value pharma products including bulk drugs and complex generics as well as biopharmaceuticals. Aimed at cutting import dependence and to make India a hub of pharma production and innovation, the PLI Scheme for Pharmaceutical Sector encourages manufacturers to increase production, incorporate new technologies, and enhance manufacturing competitiveness internationally. Besides having the multiplier effect that leads to economic growth, the PLI Scheme for Pharmaceutical Sector benefits employment generation and forms part of the foundation for India’s healthcare security through its support of a healthy and effective pharmaceutical value chain. The PLI Scheme for Pharmaceutical Sector is to identify and develop specific sectors of the country’s overall economy, to transform India into a global center for quality pharma manufacturing.
The Production Linked Incentive (PLI) Scheme for Pharmaceutical Sector offers substantial benefits to India’s pharmaceutical industry, including:
The Production Linked Incentive (PLI) Scheme for Pharmaceutical Sector offers structured incentives based on category and global manufacturing revenue:
| Category | Eligibility Criteria (Global Manufacturing Revenue, FY 2019-20) | Incentive Pool |
|---|---|---|
| Group A | Applicants with GMR greater than or equal to Rs 5,000 crore | Rs 11,000 crore |
| Group B | Applicants with GMR between Rs 500 crore and Rs 5,000 crore | Rs 2,250 crore |
| Group C | Applicants with GMR less than Rs 500 crore | Rs 1,750 crore |
The following table shows the incentive rates for incremental sales based on the categories of pharmaceutical goods under the Production Linked Incentive (PLI) Scheme for pharmaceutical sector:
| Fiscal Year | Category 1 and 2 | Category 3 |
|---|---|---|
| FY 2022-23 to FY 2025-26 | 10% | 5% |
| FY 2026-27 | 8% | 4% |
| FY 2027-28 | 6% | 3% |
Note: Financial Year 2019-20 shall be taken as the base year for assessing incremental levels of manufactured goods sales.
The following table has the eligibility of incentives under the Production Linked Incentive (PLI) Scheme for pharmaceutical sector. The criteria is to be fulfilled yearly such as minimum cumulative investment and mandatory sales growth rates to be eligible for participation.
| Group of Participants | Minimum Cumulative Investment per Participant (Rs. Crore) | Minimum Percentage Growth in Sales (Year on Year) |
|---|---|---|
| Group A |
Rs. 1,000 crore over 5 years - FY 2021-22: 200 - FY 2022-23: 400 - FY 2023-24: 600 - FY 2024-25: 800 - FY 2025-26: 1,000 |
For the first year of production, participants have to achieve minimum threshold sales which will be specified by value for each Group in the scheme guidelines. For subsequent years, the participants have to achieve a minimum percentage growth of 7% Year on Year. |
| Group B |
Rs. 250 crore over 5 years - FY 2021-22: 50 - FY 2022-23: 100 - FY 2023-24: 150 - FY 2024-25: 200 - FY 2025-26: 250 |
|
| Group C |
Rs. 50 crore over 5 years - FY 2021-22: 10 - FY 2022-23: 20 - FY 2023-24: 30 - FY 2024-25: 40 - FY 2025-26: 50 |
Note: MSME participants in Group C may follow the minimum cumulative investment as committed in their application form
The PLI Scheme for pharmaceutical sector will be for a period of ten years starting from FY 2020-21 to FY 2028-29. This period also incorporates the time taken for processing the applications in the year 2020-21, a one year gestational period in 2021-22 and six years of incentives in 2022-23 to 2027-28. The incentives for meeting the sales targets for the period FY 2027-28 are to be paid in the last year, that is FY 2028-29.
The Production Linked Incentive (PLI) Scheme for the Pharmaceutical Sector is set to help create India as a hub for pharma manufacturing. Being linked with investment and sales volume the PLI Scheme for Pharmaceutical Sector encourages domestic production of high added value products such as drugs, active pharmaceutical ingredients and biopharmaceuticals. Apparel exports also contribute to enhancement of its position in the global supply chain, getting massive investment and import substitution. Having specific incentives such as building infrastructure, employment, and exporting, the PLI Scheme for Pharmaceutical Sector ensures the solid background of the Indian healthcare sector. Understanding the corresponding time and the flow of funds, it is expected that the PLI Scheme for Pharmaceutical Sector will bring a stable and long-term development of the Indian pharmaceutical industry and the economic structure.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
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The PLI scheme for pharmaceutical sector is a government initiative to boost production of volume and value-added pharma products in India including API, complex generics and Biopharmaceutical.
The PLI Scheme has several benefits such as attracting global and domestic investors, improving the existing setups in the pharma sector, promoting domestic production, generating employment opportunities.
The PLI Scheme for Pharmaceutical Sector is in operation from FY 2020-21 to FY 2028-29 consisting of applying for license in the current financial year 2020-21, incubation period in the next financial year 2021-22 and incentive distribution in from 2022-23 to 2027-28 and the last installment will be paid for FY 2027-28 in FY 2028-29.
The PLI Scheme promotes India as an international hub for pharmaceutical production by enhancing the manufacturing capability, incorporating the advanced technologies and reduce dependence on imported products.
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