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India's PLI scheme transforms pharma industry from policy to practice: Vikram Aditya Sehgal
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Nandita Vijayasimha, Bengaluru
August 07 , 2025
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India's production linked incentive (PLI) scheme has emerged as a transformative policy aimed at revitalizing the pharmaceutical sector and its global competitiveness. By providing targeted financial incentives, the scheme is moving beyond policy intent to practical implementation, fostering domestic manufacturing, reducing import dependency on key raw materials, and positioning India as a reliable player in the global pharma supply chain.
Vikram Aditya Sehgal, director - finance, Centrient India said that the world has long recognized our country as the 'pharmacy of the world', providing over 20% of global generic drugs. However, this strength hides a significant weakness. Indian pharma imports nearly 70% of bulk drugs and API from China, which creates major supply chain dependency. The PLI scheme addresses this by promoting local production of essential raw materials through financial support and stable policies.
The sector is thriving at a CAGR of 9.43% over the past nine years and currently ranks third in volume. It was in 2020 that the Union government brought in the PLI scheme to boost domestic manufacturing, especially pharmaceuticals. It supports 'Atmanirbhar Bharat' objective by strengthening India's manufacturing capabilities and increasing exports, he added.
Financial incentives are based on increased sales and added value. It seeks to improve the production of high-value goods, encourage investments in innovation, and lessen dependence on imports. For the pharmaceutical sector, the government set aside Rs. 15,000 crore to support production of APIs (active pharmaceutical ingredients), KSMs (key starting materials), and drug intermediates. Overall intent was to boost local production and reduce import dependency.
During the Covid-19, global disruptions showed how fragile essential supply chains could be. To address this, the PLI scheme helped companies make 41 specific APIs and KSMs, which include antibiotics, antivirals, and vitamins.
Pharmaceutical companies have begun investing in domestic API production through the scheme. Yet a significant portion of bulk drugs and advanced drug intermediates continues to be imported, noted Sehgal.
Improving domestic infrastructure increases India's reliability as a global supplier of pharmaceuticals. As the US, EU, and Japan look for alternatives for API imports, the PLI scheme allows Indian companies to grow and meet strict global regulatory standards. The initiative not only boosts export potential but also improves supply chain resilience, he said.
Boosting infrastructure and capacity building, the PLI scheme focuses on incentivizing a strategic shift towards high-value, innovative products such as biologics, complex generics, and specialty formulations. Companies have responded by increasing their API manufacturing capacity. They are also investing in green chemistry and fermentation-based production to meet sustainability and quality goals.
In addition to promoting capital growth, the PLI scheme also encourages job creation and skill development. Industry estimates suggest that PLI-supported pharma projects will generate over 100,000 direct and indirect jobs and thousands more in related industries by 2025. To support this growth, state governments and central agencies are establishing pharma parks and industrial clusters that provide shared infrastructure, lower costs, and ensure regulatory compliance. By helping both MSMEs and large enterprises grow, the scheme has also shifted India's export profile toward high-value-added products, contributing to overall growth across various sectors, pointed out Sehgal.
Balancing domestic growth with global competitiveness, the PLI scheme is redefining India's pharma's self-reliance, fosters high-value manufacturing, modernizes supply chains, and aligns industry needs and growth with national priorities, said Sehgal.
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