Government announces revamped subsidy scheme to strengthen, upgrade pharma units

The scheme was limited to MSME pharma manufacturing units earlier.

The Department of Pharmaceuticals on March 11 unveiled a revised subsidy initiative to support the pharma industry's upgradation to the revised Schedule-M & WHO-GMP standards, to enhance the quality and safety of pharmaceutical products manufactured in the country.

The initiative, a modification of the Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS), extends eligibility to pharmaceutical units with an average turnover of under Rs 500 crore over the past three years.

Companies can receive a maximum incentive of Rs 1 crore, on an anticipated expenditure of Rs 150 crore each in 2024-25 and 2025-26, benefiting 150 companies annually. The scheme was limited to MSME pharma manufacturing units earlier.

The objective is to offer "subsidies based on quality" reimbursement, aiding pharmaceutical companies in achieving revised Schedule M and WHO-GMP certifications.

The Schedule M part of the Drugs and Cosmetics Act 1940 deals with "Good Manufacturing Practices" to be followed by pharmaceutical units in the country.

WHO Good Manufacturing Practice (GMP) is a quality standard system to ensure that products are consistently produced and controlled to the standards appropriate to their intended use and as required by the marketing authorisation.

In 2022, the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, introduced guidelines for the "Strengthening of Pharmaceutical Industry (SPI)" scheme, with an outlay of Rs 500 crore from FY 21-22 to FY 25-26. PTUAS operates as a credit-linked scheme within this initiative.

Investments made for machinery and premises upgrades after January 1, 2024, will be considered in subsidy calculations, encompassing both domestic and imported machinery, along with eligible expenses on clean room facilities, testing labs and waste management.

The new benefit limit is based on turnover of the company. Units with less than Rs 5 crore turnover will get an incentive of 20 percent of investment under eligible activities.

The units with turnover ranging from Rs 50 crore to less than Rs 250 crore will get an incentive of 15 percent of investment, while for those with turnover ranging from Rs 250 crore to less than Rs 500 crore, it will be 10 percent of investment under eligible expenses.

The revised scheme also eliminates the penalty clause. Previously, pharma MSMEs availing of benefits faced penalties for non-compliance with technological upgrades within 18 months of loan disbursement.

Also read: Indian pharma market registers 9% growth in February