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India’s PLI Scheme Spurs Bulk Drug Manufacturing, Reducing China Dependence

In FY 2018-19, bulk drugs accounted for 63% of India’s pharmaceutical imports, underscoring the country’s heavy dependence on foreign suppliers. However, recent government initiatives have started yielding results. In FY25 (April-December), India recorded a slight trade surplus in bulk drugs, with exports reaching $3,520 million and imports at $3,504 million.

• By Pooja Chaturvedi Sah
• New Delhi
• Mar 17, 2025

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India has made significant strides in domestic production of key pharmaceutical ingredients under the Production Linked Incentive (PLI) scheme, reducing reliance on Chinese imports, Mint has reported. The initiative focuses on manufacturing bulk drugs—essential raw materials for antibiotics and medicines treating chronic conditions like diabetes and cardiovascular diseases.

In FY 2018-19, bulk drugs accounted for 63% of India’s pharmaceutical imports, underscoring the country’s heavy dependence on foreign suppliers. However, recent government initiatives have started yielding results. In FY25 (April-December), India recorded a slight trade surplus in bulk drugs, with exports reaching $3,520 million and imports at $3,504 million.

Launched in 2020 with a financial outlay of ₹6,940 crore, the PLI scheme has already led to the commissioning of 34 projects to enhance the domestic production of 25 bulk drugs.

PLI Scheme: Transforming India’s Pharma Industry

The Indian government has undertaken multiple measures to boost domestic drug manufacturing, reduce import dependence, and attract major investments. The PLI Scheme for Pharmaceuticals, with an allocation of ₹15,000 crore over the production tenure (FY 2022-23 to FY 2027-28), provides incentives to 55 selected applicants for producing high-value pharmaceutical products such as patented and off-patented drugs, biopharmaceuticals, complex generics, and life-saving medicines like anti-cancer and autoimmune drugs.

Similarly, the PLI Scheme for Bulk Drugs aims to promote the domestic production of critical Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs). With a financial outlay of ₹6,940 crore, the scheme is set to run from FY 2022-23 to FY 2028-29, offering financial incentives to manufacturers of 41 essential bulk drugs.

The PLI Scheme for Medical Devices, worth ₹3,420 crore, supports domestic production of high-end medical equipment like MRI machines, CT scanners, and ultrasound machines, previously imported in large quantities.

New Manufacturing Facilities to Curb Import Dependence

In a major boost to local production, two new greenfield bulk drug plants were inaugurated under the PLI scheme last month. These plants will manufacture Penicillin G, 6-APA (6-Aminopenicillanic acid), and Clavulanic Acid, crucial molecules for antibiotics whose production had ceased in India for over two decades.

Penicillin G and Clavulanic Acid were primarily imported from China, making India’s pharmaceutical industry vulnerable to supply chain disruptions. With these new facilities, the government expects to cut import dependence on these key ingredients by 50%. 

• Lyfius Pharma, a subsidiary of Aurobindo Pharma, has set up a facility in Kakinada, Andhra Pradesh, to manufacture 15,000 metric tonnes (MT) of Penicillin G annually. Of this, 3,000 MT will be sold domestically, while 12,000 MT will be used to produce 6,000 MT of 6-APA, a vital intermediate for antibiotics such as Amoxicillin and Ampicillin.

• Kinvan Private Limited (KPL) has started operations at its 400-MT plant in Solan, Himachal Pradesh, to manufacture Clavulanic Acid, a key API for bacteria-resistant antibiotics. India currently imports 100% of its Clavulanic Acid, with 85.3% sourced from China. The new plant is expected to substitute nearly 40% of the country’s Clavulanic Acid imports.

Investment Surge and Employment Generation

The PLI scheme has already led to investments exceeding initial projections. Against a committed investment of ₹3,938 crore, actual investments have reached ₹4,155.77 crore. This has resulted in cumulative sales of ₹1,330.82 crore, including exports worth ₹389.82 crore, and employment generation for over 4,200 individuals.

Similarly, under the PLI Scheme for Medical Devices, 19 greenfield projects have been commissioned for 44 products, including high-end medical equipment. Against an investment target of ₹1,356.94 crore, the realized investment has reached ₹1,057.47 crore, contributing to cumulative sales of ₹8,039.63 crore, including exports worth ₹3,844.01 crore.

Expanding India’s Global Pharma Footprint

Union Minister for Chemicals & Fertilizers and Health & Family Welfare, Dr. Mansukh Mandaviya, emphasized the critical role of the PLI scheme in reducing import dependence and positioning India as a major global supplier of bulk drugs and medical devices.

“The COVID-19 pandemic highlighted the risks of being overly dependent on imports for essential medicines and medical devices,” Dr. Mandaviya stated during the recent virtual inauguration of 27 greenfield bulk drug projects and 13 greenfield medical device manufacturing plants. “The PLI scheme is a strategic step towards ensuring India’s pharmaceutical self-sufficiency and strengthening our global competitiveness.”

He further noted that under PLI-I, the government identified 48 essential bulk drugs for local manufacturing. The success of this initiative led to PLI-II, a ₹15,000 crore scheme aimed at making Indian pharmaceutical products globally cost-competitive.

Highlighting the revival of Penicillin G production in India after three decades, Dr. Mandaviya explained how globalization had led to the closure of domestic production units. “With renewed government focus and industry collaboration, we are bringing back the manufacturing of Penicillin G and other essential bulk drugs to ensure a resilient pharmaceutical supply chain,” he said.

Future Roadmap: From Import Dependence to Global Leadership

India is currently the world’s third-largest producer of pharmaceuticals by volume, with an industry size of approximately $50 billion (FY 2022-23), projected to grow to $130 billion by 2030. The country is also the largest supplier of generic medicines, holding a 20% share in the global market.

However, while India has excelled in formulations, its dependency on imported bulk drugs has been a longstanding challenge. The PLI scheme seeks to reverse this trend by:

• Increasing domestic manufacturing capacity for 41 bulk drugs

• Providing 20% incentives for fermentation-based bulk drugs in the first four years, gradually reducing to 5% by the sixth year

• Offering 10% incentives for chemical synthesis-based bulk drugs over six years

• Encouraging investments in greenfield manufacturing plants to create a robust domestic supply chain

Since the launch of the PLI scheme, India’s pharmaceutical sector has grown at a compound annual growth rate (CAGR) of 12%, with net imports of medical devices decreasing for the first time in 2023.

A Self-Reliant Future for Indian Pharma

The PLI scheme marks a turning point in India’s pharmaceutical landscape, fostering self-reliance, reducing dependence on Chinese imports, and strengthening the country’s position as a global pharmaceutical hub. With record investments, new manufacturing facilities, and a government-backed push for innovation, India is well on its way to becoming a leader in bulk drug production.

The coming years will be crucial in determining whether India can fully transition from an importer to a dominant exporter of APIs and medical devices. However, with strategic policies and industry collaboration, the country appears set to achieve its vision of Atmanirbhar Bharat (Self-Reliant India) in Pharmaceuticals.