GoI to launch Rs 25,000 crore plan to cut Chinese Imports

September 18, 2020

The Government of India is to launch a production linked incentive scheme in order to reduce dependence on Chinese import of chemicals. The scheme will have an outlay of Rs 25,000 crores and is to be implemented over the next five years.

Highlights

The department of chemicals over a series of recent meeting, has identified around 75 critical chemicals to be added to the scheme. These are key Chemicals that are used in insecticides, pharmaceuticals and other critical industrial purposes. The main intention of the scheme is to boost local manufacturing of these key chemicals.

Background

India imports Rs 1.5 lakh crore worth Chemicals annually. Of these 85% to 90% are imported from China. These Chemicals are predominantly used in manufacturing active Pharmaceutical ingredients and insecticides.

India is already implementing a production linked incentive scheme for APIs. However, there are certain key Chemicals that are still being imported from China for manufacturing APIs. Thus, there is a necessity of the new scheme to cover these chemicals that are still being imported from China.

How did India lose its API market to China?

In the early 1990s, India was self-reliant in manufacturing APIs. With the rise of China as a producer of API between 1990 and 2000, India lost its market. China created low cost API products through aggressive government funding and tax incentive. The cost of operation of API manufacturing Chinese industry is one fourth that of India. Thus, due to low profit margins the Indian pharmaceutical companies stopped manufacturing over the years.

Recent Pharmaceutical schemes

In March 2020, the Government of India launched two schemes to boost domestic manufacturing of API. They are as follows

Promotion of bulk drug Parks
Production linked incentive scheme

Promotion of bulk drug parks

Under the scheme, the Government of India plans to develop 3 Mega bulk drug are in partnership with the states. In order to achieve this, a sum of Rs three thousand crores has been approved full stop the scheme is to be implemented in the next 5 years.

The scheme is to be implemented by the state implementing Agencies that ought to be set up by the respective state governments.

Production linked incentive scheme

the scheme aims to promote domestic manufacturing of drug intermediates, key starting materials and active Pharmaceutical ingredients in the country. Scheme will provide an incentive to to the 53 identified critical bulk drugs for a period of six years. The new scheme to be launched aims to 75 more to this list