India to Curtail Imports and Hike the Domestic Production of Pharmaceuticals and Medical Equipment



Union Minister for Chemicals and Fertilizers, Sadananda Gowda announced the four different schemes to usher a new medical revolution in the country. These schemes target to boost India’s medical manufacturing and reduce the import of medical devices and raw materials for drugs.

India currently imports around 80% of its medical devices from countries like China, United States, Germany, and Singapore. This decision is likely to boost the Indian market fabricating medical devices and would eventually lessen down imports from foreign nations.


Monday Tweet


“Some of them are very critical as they are used in the production of essential medicines. Around 86% of materials used to make medical devices are imported,” Sadananda Gowda tweeted on Monday. Moreover, The COVID- 19 pandemics has exposed weaknesses in the global chain of medical imports and exports and therefore posed a "threat to the health security of the country," the tweet continued.


Image: Sadananda Gowda on Twitter


The tweet stormed the Indian pharmaceutical markets giving new hope to the domestic production units. It attracted bulk producers in this niche and engendered them to maximum benefits out of these new policies.


Indian vs China


Hailed as the “'pharmacy of the world', India engenders a sturdy pharmaceutical sector worth $40 billion. In fact, this industrial unit motivates a reliable supplication of generic drugs and essential medical and healthcare instruments.


However, its extreme reliance on China for around 70% of inexpensive pharmaceutical raw materials and ingredients causes financial harm to the Indian markets. Thus, the government finally stands to oppose this tremendous dependence and aims to promote the local production of medicines and drugs.


In this nationwide announcement, Gowda addressed both the states and the medical equipment production houses to join hands and revolt against foreign drug manufacturing. CEO Niti Ayog, Dr. P D Waghela, Secretary, Dept of Pharmaceuticals and MoS for Shipping and MoS for Chemicals & Fertilizers, Amitabh Kant, were also present during the launch of this progressive endeavor.


Guidelines and Financial Incentives


The Chemical and Fertilizers Ministry lays down informative guidelines to enable the domestic production of 41 products and 53 pharmaceuticals. The scheme invites manufacturers in this domain and looks forward to facilitating financial incentives to 136 producers.


The Indian government will select these 136 medical drugs and medical devices engineering units and allow these companies to achieve a fixed percentage of remuneration over their sales of these 41 products.


Video: PIB India


In this reference, an approval letter is to be issued to these selected pharmacies and drug manufacturing industries which will enable them to procure incentives for a maximum period of six years.


Besides, the incentives will be credited subject to the annual ceilings available for different products and their fabrication. Also, each product will involve remunerative incentives based on their nature and scope.


For instance, fermentation products will incur an advantage of 20% for the first four years, 15% for the fifth year, and 5 % for the final year.


The Four Key Segments


The four key segments of availing financial incentives on medical and pharmaceutical fabrication are:

  • Cancer care / Radiotherapy medical devices

  • Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging devices

  • Anesthetics & Cardio-Respiratory medical devices including catheters of Cardio-Respiratory Category & Renal Care medical devices

  • AII Implants including implantable electronic devices

Eligibility and Selection Criteria


For this scheme, the government decides to elect suitable applicants on the basis of transparent composite evaluation criteria. This eligibility and performance criteria comprises the annual capacity of production which the applicant commits to furnish. It also incorporates the sale price of the product quoted by the applicant. Applicants quoting low sale price and higher production capacity will receive higher marks and preferences, the ministry stated.


The Eligibility and criteria for selection are as follows:

  • The company must be registered as per the government acts and guidelines.

  • The manufacturing unit must possess a minimum net worth ( including group companies) of INR.18 crore (30% of threshold investment of the first year)

  • The applicants can apply for multiple products within one target segment and also multiple target segments.

  • The selected applicants will have to complete a threshold investment as assigned for each year and achieve a minimum prescribed sale for that year in order to be eligible to receive incentives.

  • The application window is open for 120 days from the date of issuance of guidelines and the subsequent approval.

  • The selected applicants will be reverted within 60 days from the date of closure of the application window.

  • The applications will be received only through an online portal.

  • The total financial budget of the scheme is INR.3,420 crore.

The Bottom Line


Altogether, these schemes will extremely benefit India and its domestic medicine manufacturers. Additionally, this decision will also make the country capable of catering to the global demand for the selected drugs and medical devices.


In a nutshell, this is a golden opportunity for the investors as the availability of financial incentives will furnish incredible support to the production of medical devices and drugs.


In fact, these schemes will supplement the liberal FDI policy in these sectors. The effective corporate tax rate of about 17 percent (including surcharge and cess) will also provide a competitive edge to India in the selected products and will foster a potential boost to the Indian economy.


Log in to https://pharmaceuticals.gov.in/schemes for more information on these four new schemes and other details.


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