The Government of India, through the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers, has implemented two dedicated Production Linked Incentive (PLI) schemes to achieve self-reliance and bolster export competitiveness in the pharmaceutical sector. These interventions are a core component of the Atmanirbhar Bharat Abhiyan aimed at mitigating supply chain risks, particularly the heavy reliance on imported active pharmaceutical ingredients from single-source countries like China.
- Project Management Agencies (PMAs): The Small Industries Development Bank of India (SIDBI) acts as the PMA for the PLI Scheme for Pharmaceuticals, whereas IFCI Ltd. manages the PLI Scheme for Bulk Drugs.
- Base Year: The financial year 2019-20 serves as the base year for calculating the baseline investment and global manufacturing revenue for target applicants.
PLI Scheme for Pharmaceuticals (The Umbrella Scheme)
Approved by the Union Cabinet in 2021, this scheme is strategically designed to shift the Indian pharmaceutical industry up the global value chain by incentivizing the production of high-value, complex, and patented medical products.
Financial Outlay and Tenure
- The total financial outlay for this scheme is fixed at ₹15,000 crore.
- The operational tenure of the scheme spans from FY 2020-21 to FY 2028-29.
- Financial incentives are granted on incremental sales (over the base year) of pharmaceutical goods and in-vitro diagnostic medical devices for a maximum period of six years per participant.
Target Categories and Product Segments
The scheme classifies eligible pharmaceutical products into three distinct categories to ensure diversified growth in research and development and complex generics.
- Category 1 (High-Value Products): Includes biopharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry, cell-based or gene therapy drugs, orphan drugs, complex excipients, and phyto-pharmaceuticals. The incentive rate is 10% for the first four years, tapering to 8% and 6% in subsequent years.
- Category 2 (Intermediates and APIs): Covers Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), and Drug Intermediates (DIs) that are not covered under the separate PLI scheme for Bulk Drugs. The incentive rate mirrors Category 1.
- Category 3 (Essential and Repurposed Drugs): Encompasses repurposed drugs, auto-immune medications, anti-cancer drugs, anti-diabetic drugs, anti-infectives, cardiovascular drugs, in-vitro diagnostic devices, and other drugs not traditionally manufactured in India. The incentive rate is 5% for the first four years, tapering to 4% and 3%.
PLI Scheme for Bulk Drugs (APIs, KSMs, and DIs)
Approved in July 2020, this focused sub-scheme was triggered by the COVID-19 pandemic to ensure domestic drug security by manufacturing critical raw materials within the country.
Financial Outlay and Target Segments
- The scheme operates with a total budgetary outlay of ₹6,940 crore.
- The operational tenure extends until FY 2029-30 to allow for the long gestation periods required for setting up greenfield chemical plants.
- It specifically targets 41 identified critical products divided into four segments: Key Fermentation-based KSMs/DIs, Niche Fermentation-based KSMs/APIs, Key Chemical Synthesis-based KSMs/DIs, and Other Chemical Synthesis-based KSMs/APIs.
Strategic Manufacturing Outcomes
- The scheme has successfully catalyzed the domestic manufacturing of highly critical, import-dependent molecules such as Penicillin G, Clavulanic Acid, Atorvastatin, Telmisartan, Para Amino Phenol, and Diclofenac Sodium.
- Only greenfield projects (newly established manufacturing plants) are eligible for incentives under this specific bulk drug scheme to ensure genuine capacity addition rather than the expansion of existing facilities.
Progress and Macroeconomic Impact (As of Early 2026)
The implementation of both pharmaceutical PLI schemes has significantly exceeded initial government projections regarding capital expenditure and domestic sales.
| Parameter | Achievement / Status (As of Q1 2026) |
| Cumulative Investment | Surpassed ₹46,734 crore against an initial committed target of ₹21,605 crore across both schemes. |
| Manufacturing Capacity Created | Over 56,800 Metric Tonnes (MT) per annum of capacity established for 28 critical KSMs/APIs. |
| Import Substitution | Avoided imports worth over ₹3,591 crore in essential raw materials, directly reducing the trade deficit in the chemical sector. |
| Sales Performance | Generated cumulative sales of over ₹3.36 lakh crore, heavily driven by strong export figures surpassing ₹6,300 crore from PLI-backed units. |
Synergistic Initiative: Promotion of Bulk Drug Parks
To complement the PLI schemes and reduce the high capital cost of manufacturing for pharmaceutical companies, the Department of Pharmaceuticals simultaneously implements the Scheme for Promotion of Bulk Drug Parks.
- Financial Allocation: The scheme commands a budgetary outlay of ₹3,000 crore.
- Infrastructure Development: It provides a one-time grant-in-aid to states for the creation of Common Infrastructure Facilities (CIF) such as effluent treatment plants, solid waste management systems, and steam generation units.
- Approved Locations: Three mega Bulk Drug Parks are currently under advanced stages of development in the states of Andhra Pradesh, Gujarat, and Himachal Pradesh.
- Incentive Ceiling: The maximum central assistance is capped at ₹1,000 crore per approved park, while the respective state governments provide additional fiscal incentives like stamp duty exemption and capital subsidies to attract private manufacturing units.