Introduction: PLI scheme for pharmaceutical industries
India’s pharmaceutical industry is one of the largest suppliers of generic medicines worldwide. However, for decades, the country relied heavily on imports of critical Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs). To reduce this dependency and strengthen domestic manufacturing, the Government of India launched the Production Linked Incentive (PLI) Scheme for Pharmaceutical Industries.
This scheme is part of the broader “Atmanirbhar Bharat” initiative and is directly linked. For pharmaceutical businesses, the scheme is not only a boost in competitiveness but also a gateway to substantial financial incentives and subsidies.
What is the PLI Scheme for Pharmaceutical Industries?
The PLI scheme for pharmaceutical industries is designed to encourage large-scale domestic production of 41 critical APIs, KSMs, and DIs. It provides financial incentives on incremental sales over a defined base year, helping manufacturers become globally competitive while cutting down India’s import reliance.
Unlike generic subsidy programs, this scheme is performance-linked — meaning the more a manufacturer produces and sells, the greater the incentive.
Target Segments under the Scheme
The scheme is divided into two broad categories:
- Fermentation-based KSMs/APIs – such as Penicillin G, 7-ACA, Erythromycin Thiocyanate, Clavulanic Acid, Rifampicin, Vitamin B1, and more.
- Chemical synthesis-based KSMs/APIs – such as Atorvastatin, Diclofenac Sodium, Ciprofloxacin, Levofloxacin, Meropenem, and others.
This wide coverage allows pharmaceutical companies across multiple segments to benefit.
PLI Scheme Incentive Rates
The PLI scheme incentive rates are linked to the net sales of eligible products. The scheme spans the financial year 2020-21 to 2029-30, providing a clear roadmap for investors:
- Fermentation-Based Products:
- FY 2023-24 to FY 2026-27: 20% of net sales
- FY 2027-28: 15% of net sales
- FY 2028-29: 5% of net sales
- Chemical Synthesis-Based Products:
- FY 2022-23 to FY 2027-28: 10% of net sales
- Relaxation in DVA:
Applicants achieving slightly lower domestic value addition can still benefit:- Fermentation-based products with 80-90% DVA
- Chemical synthesis-based products with 60-70% DVA
These applicants receive 50% of the eligible incentive for a maximum of 12 months during the scheme tenure.
- Maximum Incentive per Applicant:
Incentive caps are product specific. For example, for Penicillin G:- First four years (Y1-Y4): ₹240 crore
- Y5: ₹180 crore
- Y6: ₹60 crore
- Total Scheme Outlay:
The overall budget allocated under the scheme is ₹6,940 crore, reflecting the government’s commitment to strengthening pharmaceutical manufacturing in India.
Eligibility Criteria for the Scheme
PLI scheme eligibility criteria are stringent but clear:
- Only Indian-registered manufacturers of critical APIs/KSMs/DIs can apply.
- Must meet threshold investment requirements in greenfield projects.
- Eligibility under PLI does not disqualify companies from other government schemes.
For companies, interpreting these criteria correctly is critical. Even a minor compliance error can delay or reject the application. That is why most businesses seek specialized consultancy support.
PLI Scheme for APIs and Bulk Drugs
The scheme gives particular focus to APIs and bulk drugs — areas where India has historically been import-dependent. The PLI scheme for APIs and PLI scheme for bulk drugs works in tandem with the Bulk Drug Parks policy.
These guidelines provide infrastructure support for bulk drug parks, while the PLI scheme ensures direct production-linked incentives. Together, they make India more self-reliant and globally competitive.
Application Process and Why Expert Guidance Matters
While the PLI scheme application process is officially open to eligible manufacturers, it involves:
- Multiple government touchpoints
- Detailed financial disclosures
- Compliance checks with revised guidelines
- Documentation that must match investment thresholds and production plans
Attempting to navigate this alone can be overwhelming. More importantly, a misstep can mean losing access to significant incentives worth crores of rupees.
Instead of managing the process in-house, most pharma businesses prefer to work with experienced subsidy consultants who understand both the technicalities and compliance frameworks.
This ensures:
- Applications are error-free and timely
- Maximum subsidy benefits are secured
- Continuous compliance is maintained throughout the incentive period
Subsidy for Pharmaceutical Manufacturing in India
The PLI scheme pharma India is one of the largest government-backed subsidy programs for pharmaceutical manufacturing in India. By linking production and incentives, it helps businesses scale while ensuring India achieves self-reliance in key raw materials.
For manufacturers, the real opportunity lies in leveraging expert consultancy services to identify eligible products, calculate potential benefits, and manage compliance across six to seven years of incentive disbursements.
Why Choose Professional Consultancy Support?
- Policy Interpretation: Guidelines change (such as the revised 2020 bulk drugs notification). Consultants ensure your business aligns with the latest framework.
- Customized Strategy: Every pharma company has different product portfolios; consultants identify which APIs or KSMs can yield the highest benefits.
- End-to-End Support: From preparing documentation to follow-up with government departments, professional guidance saves time and maximizes financial gains.
- Risk Reduction: Avoid costly mistakes in compliance and eligibility checks.
Conclusion
The PLI scheme for pharmaceutical industries in India represents a transformative step for the sector, reducing import dependence and creating a strong domestic manufacturing base. However, understanding the PLI scheme eligibility criteria, incentive rates, and revised bulk drug guidelines requires expertise.
For pharmaceutical businesses, the smartest approach is to focus on production while leaving the subsidy application and compliance to be experienced consultants. This ensures you maximize incentive benefits while staying compliant with evolving government policies.
FAQs
Q1. What is the PLI scheme for pharmaceutical industries in India?
It is a government initiative that provides sales-linked financial incentives to encourage domestic production of APIs, KSMs, and bulk drugs.
Q2. Which products are covered under the PLI scheme for APIs and bulk drugs?
The scheme covers 41 identified products across fermentation-based and chemical synthesis categories.
Q3. How much incentive is provided under the scheme?
Incentive rates range from 20% to 5% for fermentation-based products and 10% for chemical synthesis-based products, depending on the year.
Q4. Who can apply for the PLI scheme?
Only Indian-registered manufacturers with eligible greenfield investments can apply.
Q5. Why should businesses work with a subsidy consultant?
Because the application and compliance process are complex, consultants ensure maximum benefits and error-free execution.
