Govt okays PLI for pharma, laptops, tablets and PCS
The Cabinet on Wednesday approved a ~15,000-crore production-linked incentive (PLI) scheme to boost local manufacturing and exports of highvalue pharma products and another plan worth ~7,350 crore for information technology (IT) hardware products. The duration of the first scheme is eight years while the second one for products such as laptops, tablets, personal computers and servers is four years.
The Cabinet on Wednesday approved a ~15,000-crore production-linked incentive (PLI) scheme to boost local manufacturing and exports of highvalue pharma products and another plan worth ~7,350 crore for information technology (IT) hardware products.
The duration of the first scheme is eight years while the second one for products such as laptops, tablets, personal computers and servers is four years.
Pharma sector
The scheme is expected to generate 20,000 direct and 80,000 indirect jobs. The government has sanctioned a 10 per cent rate of incentive (of the incremental sales value) for two categories of pharma products (including biopharmaceuticals, complex generics, patented drugs nearing expiry, bulk drugs, intermediates among others) for the first four years, 8 per cent for the fifth year, and 6 per cent for the sixth year of production. Similarly, a 5 per cent incentive has been announced for repurposed drugs, cancer drugs, psychotropic and cardiovascular drugs, etc, which goes down to 4 per cent in the fifth year and 3 per cent in the sixth year of production.
IT hardware sector
“Domestic value addition for IT hardware is expected to rise to 20-25 per cent by 2025 from the current 5-10 per cent due to the impetus provided by the scheme,” the government said.
The scheme is expected to lead to production of up to ~3.26 trillion by five global and 10 national companies. The government also expects that of the total production in the next four years, more than 75 per cent is expected to be exports — ~2.45 trillion. The incentive which has been under discussion with stakeholders ranges from 2-4 per cent and will be for laptops with invoice value of greater than $400 and tablets of over $200. The scheme will bring an additional investment in electronics manufacturing to the tune of ~2,700 crore, Electronics and IT Minister Ravi Shankar Prasad said.
Industry response
Pharma majors like Lupin, Cipla, Dr Reddy’s Laboratories have already shown interest in participating in the scheme.
Lupin, for example, has applied under the bulk drugs API scheme, and is looking to participate in the second round. India’s third-largest pharma firm Cipla has also indicated it will be interested in participating in the second phase.
Kunal Chaudhary, tax partner, EY India, said the expansion for IT Hardware will not only enable India to become an electronics manufacturing hub for the world, but also promises a substantial rise in value addition.