This Tax Alert summarizes the Operational guidelines[1] issued by the Central Government for production linked incentive (PLI) scheme for Pharmaceuticals.
The key highlights are:
- The application under the scheme can be filed between 2 June 2021 to 31 July 2021 (both days inclusive). Scheme covers period beginning financial year (FY) 2020-21 till FY 2028-29.
- The applicants shall apply within three groups based on the respective criteria of their global manufacturing revenue (GMR) in FY 2019-20. Eligible applicants will be ranked based on marks obtained in the specified evaluation criteria and the selection shall be in order of their ranks.
- The selected participants in the scheme will be eligible for incentives on incremental sales (i.e., over and above sales of base FY 2019-20) of eligible pharmaceutical products based on yearly threshold criteria of minimum cumulative investment and minimum percentage growth in sales.
- The incentive shall be computed as Net incremental Sales of Eligible Product x Rate of Incentive.
- The list of eligible products and criteria for eligible investments have also been provided.
Comments
- The scheme may facilitate product diversification to high value goods in the pharmaceutical sector of the country and change India’s image as a manufacturer and exporter of drugs and medical devices.
- It would be advisable for the desired applicants to work on the project plans and evaluate whether expansion/ entry into new product segments could stand the test of business feasibility and the likely benefits that could accrue to the company.
- Further, applicants could also explore benefits by way of incentives announced by Central and State Governments under various schemes which could be availed along with PLI.
- Given the enhanced budgetary outlay and increased product coverage under the new PLI scheme, it may be an exciting opportunity for the pharma industry to be part of Atmanirbhar Bharat vision of the government, boost its domestic manufacturing capabilities, be competitive in the export market and engage proactively in the growth agenda of the nation.
