हिंदी साहित्य: पेन ड्राइव कोर्स
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Indian Economy

PLI Scheme for IT Hardware and Pharmaceuticals

  • 26 Feb 2021
  • 4 min read

Why in News

Recently, the Union Cabinet has cleared Production-Linked incentive (PLI) schemes for pharmaceuticals and IT hardware, including laptops, which would cost the government as much as Rs. 22,350 crore.

Key Points

  • PLI Scheme:
    • It aims to give companies incentives on incremental sales from products manufactured in domestic units.
    • It invites foreign companies to set units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.

  • IT Hardware Sector:
    • About:
      • The scheme, worth Rs. 7350 crore, will offer 1-4% cash incentives on net incremental sales (over base year 2019-20) for IT products manufactured in India.
      • The Target Segments include Laptops, Tablets, All-in-One PCs and Servers.
      • Duration: 4 years
    • Benefits:
      • India will be well positioned as a global hub for Electronics System Design and Manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT Hardware exports.
      • Employment Generation potential of over 1,80,000 (direct and indirect) over 4 years.
      • Provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20-25% by 2025.
  • Pharmaceutical Sector:
    • About:
      • The Rs. 6,940-crore PLI scheme implemented in 2020 focuses on the critical bulk drugs, whereas this scheme is likely to focus on other types of bulk drugs.
      • It intends to give incentives between 2020-21 and 2028-29 (9 years).
      • Drug manufacturers applying for the scheme will have to be registered in India and will be placed into one of three categories based on their Global Manufacturing Revenue (GMR).
    • Categories of Drugs Targeted by the Scheme:
      • First Category:
        • It includes biopharmaceuticals, complex generics, patented and orphan drugs, often expensive for which India relies a lot on multinational drug makers.
      • Second Category:
      • Third Category:
        • It includes other critical repurposed, auto-immune, anti-cancer, anti-diabetic, anti-retroviral, anti-infective and cardiovascular drugs as well as in-vitro diagnostic devices and drugs not manufactured in India.
    • Incentives:
      • For First and Second Category:
        • 10% of incremental sales value for the first four year of the scheme, followed by 8% for the fifth year and 6% for the sixth year of production under the scheme.
      • For Third Category:
        • 5% of incremental sales value for the first four years, 4% for the fifth year and 3% for the sixth year.
    • Benefits of PLI in Pharmaceuticals:
      • Reduced Dependency on China:
        • India’s capabilities in APIs have reduced over the years, mostly due to cheaper alternatives from China.
        • The pharmaceutical industry here is currently dependent on the bordering country for nearly 70% of the bulk drugs it imports.
      • Enhance Exports:
        • The Indian pharmaceutical industry is the third-largest globally in terms of the volume term of production and is worth USD 40 billion in value.
        • The country contributes 3.5% of total drugs and medicines exported globally.

Source: IE

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