India's Department of Pharmaceuticals has launched the fifth round of applications under its Production Linked Incentive (PLI) scheme for bulk drugs, targeting 11 critical pharmaceutical products that remain largely dependent on imports. The initiative, announced in May 2025, represents a strategic effort to bolster domestic manufacturing capabilities and reduce the country's reliance on foreign suppliers, particularly China, which accounts for 72% of India's bulk drug imports by value.
Targeted Products and Manufacturing Capacity
The latest phase encompasses both fermentation-based and chemical synthesis products, with applications open until June 14, 2025. The Department of Pharmaceuticals will select up to 25 eligible manufacturers to fill production gaps for previously unsubscribed or partially subscribed products from earlier rounds.
Fermentation-based products include six critical antibiotics: erythromycin thiocyanate with capacity for 1,600 MT across two applicants, neomycin (160 MT), gentamicin (80 MT), clindamycin (120 MT), streptomycin (100 MT), and tetracycline (400 MT). Each fermentation product is allocated to two manufacturers to ensure supply security.
Chemical synthesis products comprise five compounds with varying capacity allocations. The largest allocation goes to dicyandiamide (DCDA) at 24,000 MT across three applicants, followed by 2-methyl (5) nitro imidazole (2MNI) at 3,200 MT for four applicants. Smaller but strategically important allocations include 1,1 cyclohexane diacetic acid (CDA) at 1,500 MT, ciprofloxacin at 600 MT across four applicants, and diclofenac sodium at 175 MT for a single manufacturer.
Scheme Performance and Investment Impact
Since its inception in March 2020, the PLI scheme for bulk drugs has demonstrated significant progress in addressing India's pharmaceutical supply chain vulnerabilities. Out of 249 applications received, 48 projects have secured approval, with 34 facilities already commissioned and producing 25 critical bulk drugs.
Investment commitments have exceeded initial projections, reaching ₹4,253.92 crore against the original commitment of ₹3,938.57 crore. Notable projects include a ₹1,910 crore penicillin G facility in Andhra Pradesh and a ₹450 crore clavulanic acid plant in Himachal Pradesh, both positioned to substantially reduce annual import expenditures.
The scheme has generated ₹1,556.04 crore in sales, including ₹412.42 crore from exports, while creating over 4,470 jobs. Projections indicate the program will generate approximately 9,600 jobs upon completion, contributing to both employment and industrial capacity building.
Strategic Framework and Compliance Requirements
The PLI scheme operates under strict compliance parameters, with incentives available until FY 2027-28 for chemical synthesis products and FY 2028-29 for fermentation-based products. Companies must meet annual production capacity thresholds and adhere to specified incentive ceilings throughout the production tenure.
Eligibility restrictions prevent entities that previously withdrew from the scheme or had approvals revoked due to non-performance from reapplying for the same products. This accountability measure ensures focus on manufacturers capable of scaling production rapidly and maintaining consistent output.
Raja Bhanu, Director General of the Pharmaceuticals Export Promotion Council of India, emphasized the scheme's significance, stating it "presents a significant opportunity to enhance manufacturing capabilities in critical pharmaceutical components."
Broader Policy Context and Future Outlook
The bulk drug PLI scheme forms part of a comprehensive ₹6,940 crore financial framework spanning FY 2021-2030, complementing a broader ₹15,000 crore PLI initiative focused on finished formulations and advanced pharmaceutical manufacturing. This multi-tiered approach addresses both upstream and downstream pharmaceutical manufacturing needs.
With 14 additional projects currently under construction and expected commissioning by FY 2025-26, the government anticipates increased domestic output and higher incentive disbursements. To date, ₹20.32 crore in incentives have been disbursed, reflecting the gradual but consistent ramp-up required to meet quality and stability benchmarks.
The initiative represents a critical component of India's pharmaceutical sovereignty strategy, addressing structural weaknesses in the supply chain while positioning the country as a more self-reliant pharmaceutical manufacturing hub. The scheme's success in attracting investment and generating employment demonstrates its effectiveness in achieving both economic and strategic objectives.
