The government gave pharma MSMEs an extra year to meet investment commitments under the production-linked incentive scheme. Companies now have until FY27 to finish their promised investments. Experts said the extension helps smaller drugmakers overcome difficulties in arranging funds for capacity expansion and upgrading facilities to meet necessary quality standards.
In a relief to pharma MSMEs, the government has given them an extra year to meet their investment commitments under the production-linked incentive (PLI) scheme. Companies will now have until FY27 to complete their promised investments. The deadlines for meeting each of the earlier investment milestones have also been extended by one financial year.
Under the original guidelines issued in June 2021, participating MSMEs were required to achieve 20% of their committed investment by FY22, 40% by FY23, 60% by FY24, 80% by FY25 and the full investment by FY26. The investment was to be made in stages over five years, allowing companies time to build or expand their manufacturing facilities.
However, the extension does not reduce the total investment commitment or change the minimum annual sales growth required to qualify for incentives.
Experts said the extension could help smaller drugmakers overcome difficulties in arranging funds for capacity expansion and upgrading their facilities to meet quality standards. Rising capital expenditure and compliance costs appear to have made it harder for MSMEs to complete their investment commitments within the original timeframe.
The department of pharmaceuticals (DoP) also outlined the process for claiming incentives under the revised schedule. "The beneficiaries shall submit fresh applications for claiming incentives for the previous performance years, which shall be examined as per the extant provisions of the scheme guidelines," it said.
The pharma PLI scheme was approved with a financial outlay of Rs 15,000 crore to encourage domestic manufacturing of high-value medicines and reduce dependence on imports. It covers products such as complex generics, biopharmaceuticals, cancer drugs, orphan drugs and active pharmaceutical ingredients (APIs).
The scheme aims to attract Rs 17,275 crore in investment and generate incremental sales of Rs 2.94 lakh crore and incremental exports of Rs 1.96 lakh crore during its six-year performance period, from FY23 to FY28.
It has already surpassed its investment target. As of June 2026, the scheme had attracted Rs 46,744 crore in actual investment, while beneficiary companies recorded cumulative sales of Rs 4.03 lakh crore, including exports worth Rs 2.57 lakh crore. The scheme had also generated 1.21 lakh jobs. A total of 55 companies, including 20 MSMEs, have been selected as beneficiaries.