Centre extends medical devices PLI scheme by 8 yrs, eases eligibility norms

The Centre has extended the medical devices PLI scheme to FY36 and eased eligibility norms to encourage domestic manufacturing of critical components and high-end medical equipment, including MRI and PET-CT machines.

The Department of Pharmaceuticals (DoP) has extended the production-linked incentive (PLI) scheme to promote domestic manufacturing of medical devices by eight years to the financial year 2035-36.

Calling for fresh applications under the extended scheme, the DoP said that an outlay of approximately ₹2,700 crore available under the existing scheme will be utilised for the purpose.

"The applicants can submit applications through an online portal, which will be operational in the next ten days," officials aware of the matter said.

They added that several eligibility conditions have been relaxed on the basis of learnings from the first phase of the scheme.

While the DoP did not provide numbers, it said on Tuesday that the minimum sales threshold requirement to claim incentives has been discontinued.

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Officials added that the minimum investment requirement of ₹180 crore has also been trimmed to make the scheme more investor-friendly.

Similarly, applicants will now be allowed three years to set up their manufacturing facilities in four distinct target segments (TS).

This is a departure from the earlier PLI framework, where companies often had a very tight turnaround time (just one year or a fixed commercial date) to start production.

Under the new framework, the four TSs will include medical consumables, disposables and implants (TS1) and critical components (TS2).

TS3 will include high-end medical devices that are presently at a nascent stage of domestic manufacturing, while TS4 will have high-end medical devices that are presently only assembled in the country.

"In the TS 3 and 4, priority shall be given for value chain integration, so that there is an overall increase in competitiveness and quality of Made in India devices," the DoP said in a statement.

Similarly, a tapering incentive rate will now be used: 5 per cent for TS1, 9 per cent for TS2 and TS3, and 6 per cent for TS4.

This is a change from the earlier flat rate of incentives given on eligible incremental sales made by the participant annually.

"The incentives now match the difficulty of manufacturing. Instead of one flat rate, higher rates go where manufacturing is hardest and import dependence is deepest," a Delhi-based medtech manufacturer told Business Standard.

Announced in March 2020, the PLI scheme for medical devices has resulted in production valued at over ₹16,000 crore, according to the DoP.

"The scheme has led to domestic manufacturing of over 60 high end devices and components, including X-ray tubes and detectors, 1.5 ton Magnetic Resonance Imaging (MRI) machines, cathlabs, and dialysers among others till date," the department said.

Officials quoted above added that the objective of the new framework will be to promote deep manufacturing of medical devices, as well as the manufacturing of high-end equipment such as 3T MRI, PET-CT, ultrasound consoles and high-throughput IVD analysers, which are currently not being manufactured in the country.

However, industry sources said that the first phase of the scheme was restrictive, organised around specific clinical and equipment categories.

Medtech manufacturers' body Medical Technology Association of India (MTaI) added that the ease-of-doing-business (EoDB) reforms will now help investors choose their entry point.

Welcoming the move, Himanshu Baid, managing director at Delhi-headquartered medtech firm Poly Medicure, said that investor-friendly reforms introduced in the new framework to improve ease of doing business are encouraging.

"Simplification of scheme guidelines, discontinuation of the minimum sales threshold requirement for claiming incentives and reduction in the minimum investment requirement will make the scheme more accessible, flexible and attractive to both existing manufacturers and new investors," he added.

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