New Delhi: The Union Cabinet today approved the Production Linked Incentive (PLI) Scheme for IT Hardware as well as Pharmaceuticals. The scheme respectively proposes production linked incentive to boost domestic manufacturing and attract large investments in the value chain of IT Hardware, and to ensure the availability of wider range of affordable medicines for consumers.
A. Production Linked Incentive Scheme for IT Hardware
The target segments under the proposed Scheme include Laptops, Tablets, All-in-One PCs andServers in case of IT Hardware. The Scheme shall, extend an incentive of 4% to 2% / 1% on net incremental sales (over base year i.e. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years.”It is likely to benefit 5 major global players and 10 domestic champions in the field of IT Hardware manufacturing including Laptops, Tablets, All-in-One PCs, and Servers. This is an important segment to promote manufacturing under AtmaNirbhar Bharat as there is huge import reliance for these items at present,” a Cabinet note said.
The total cost of the proposed scheme is approximately Rs.7,350 crore over 4 years, which includes an incentive outlay of Rs.7,325 crore and administrative charges of Rs.25 crore.
The scheme has an employment generation potential of over 1,80,000 (direct and indirect) over 4 years, and it will provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20% – 25% by 2025.
It may be noted that at present, the laptop and tablet demand in India is largely met through imports valued at USD 4.21 billion and USD 0.41 billion respectively in 2019-20. The market for IT Hardware is dominated by 6-7 companies globally which account for about 70% of the world’s market share. These companies are able to exploit large economies of scale to compete in global markets. It is imperative that these companies expand their operations in India and make it a major destination for manufacturing of IT Hardware, the Cabinet note stated.
B. Production Linked Incentive Scheme for Pharmaceuticals
With regard to the scheme for Pharmaceuticals, it will be part of the umbrella scheme for the Development of Pharmaceutical Industry. It is expected to promote the production of high value products in the country and increase the value addition in exports. Total incremental sales of Rs.2,94,000 crore and total incremental exports of Rs.1,96,000 crore are estimated during six years from 2022-23 to 2027-28. “The scheme is expected to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector,” the Cabinet note stated.
It may be mentioned that Indian pharmaceutical industry is third largest in the world by volume and is worth USD 40 billion in terms of value. The country contributes 3.5% of total drugs and medicines exported globally. India exports pharmaceuticals to more than 200 countries and territories including highly regulated markets such as USA, UK, European Union, Canada among others.
The salient features of the scheme are as follows:-
Target Groups:
The manufacturers of pharmaceutical goods registered in India will be grouped based on their Global Manufacturing Revenue (GMR) to ensure wider applicability of the scheme across the pharmaceutical industry and at the same time meet the objectives of the scheme. The qualifying criteria for the three groups of applicants will be as follows-
(a) Group A: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to Rs 5,000 crore.
(b) Group B: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.
(c) Group C: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than Rs 500 crore. A sub-group for MSME industry will be made within this group, given their specific challenges and circumstances.
Quantum of Incentive:
The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about Rs 15,000 crore. The incentive allocation among the Target Groups is as follows:
(a) Group A: Rs 11,000 crore.
(b) Group B: Rs 2,250 crore.
(c) Group C: Rs 1,750 crore.
The incentive allocation for Group A and Group C applicants shall not be moved to any-other category. However, incentive allocated to Group B applicants, if left underutilized can be moved to Group A applicants.
Financial Year 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods.
Category of Goods:
The scheme shall cover pharmaceutical goods under three categories as mentioned below:
Category 1
Biopharmaceuticals; Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell based or gene therapy drugs; Orphan drugs; Special emptycapsules like HPMC, Pullulan, enteric etc.; Complex excipients; Phyto-pharmaceuticals: Other drugs as approved.
Category 2
Active Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.
Category 3 (Drugs not covered under Category 1 and Category 2)
Repurposed drugs; Auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs; In vitro diagnostic devices; Other drugs as approved; Other drugs not manufactured in India.
Rate of incentive will be 10% (of incremental sales value) for Category 1 and Category 2 products for first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme.
Rate of incentive will be 5% (of incremental sales value) for Category 3 products for first four years, 4% for the fifth year and 3% for the sixth year of production under the scheme.
The duration of the scheme will be from FY 2020-21 to FY 2028-29. This will include the period for processing of applications (FY 2020-21), optional gestation period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.
– global bihari bureau
