13 MedTech plants start operations; PLI incentive disbursements to be limited at 11%

Thirteen medical device manufacturing plants have started operations in India under the Production-Linked Incentive (PLI) scheme.

For pharmaceuticals and medical devices, the budgetary allocation is driven mainly by the manufacturing of identified pharma categories. The construction of three bulk drug parks is underway as of now with additional financial assistance from respective state governments.

For the progress on Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) and medical devices manufacturing, 27 KSM/DI/API out of total 48 have been approved under the scheme. Thirteen medical device manufacturing plants have started operations from March 2024.

Despite successes in incentive scheme in some sectors, there have been some challenges. The Centre has been adjusting allocations, refining schemes, inviting applications in response to higher sector appetite, etc. to enhance efficiency and uptake incentive disbursements across all sectors. Nevertheless, only 11% of the outlay is expected to be utilised by FY2025 (as per Budget Estimates). To improve the utilization of the announced outlay, the GoI may introduce an additional incentive scheme for new sectors like toys, leather, and footwear, which could aim to attract anchor investors to these new fields.

In FY2022, the Government of India (GoI) introduced the Production-Linked Incentive (PLI) scheme, followed by the Design-Linked Incentive (DLI) scheme, targeting 14 key sectors to enhance manufacturing and exports, reduce imports, and attract investment and technology, thereby positioning Indian manufacturers on a competitive global scale.

Of the total expected capex from the scheme of Rs. 4 trillion, 30-35% had been invested as of May 2024, as major sectors with huge capex deployment are yet to start commercial production because of long gestation periods. With over two years since the scheme started, it is crucial to assess the progress, budgetary allocations, and future outlook for the sectors benefiting from these initiatives. The Financial Express