More than 50 production projects have been approved under the PLI for APIs, and some of them have already initiated commercial production.
Published Aug 23, 2025 | 5:47 PM ⚊ Updated Aug 23, 2025 | 5:47 PM
Sorting pharmaceutical capsules by a sorting machine on a production line. (iStock)
Synopsis: India’s pharma sector is undergoing an unpublicised revolution, following the implementation of the Production-Linked Incentive (PLI) Scheme. However, the way is clear. The PLI scheme has given a much-needed push to India’s pharma industry. Government estimates say that the pharma PLI schemes alone will generate more than 1,00,000 direct and indirect employment opportunities.
India’s pharma sector, a long-standing “pharmacy of the world,” is undergoing an unpublicised revolution. The catalyst for the transformation is the Production-Linked Incentive (PLI) Scheme — a trailblazing policy step by the Indian government aimed at catalysing indigenous production, boosting exports, creating jobs, and emerging as a high-value destination pharma hub of the world.
From policy to action, the PLI scheme is not only correcting structural dependencies but also achieving innovation and competitiveness in a post-pandemic international order.
India has been a leading generic pharma producer for decades, but all this success was built on a debilitating weakness: Over-reliance on imported Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs), primarily from China.
When the world supply chains cracked under the pressure of the Covid-19 pandemic, this vulnerability was exposed. The PLI scheme addresses this challenge directly by providing a boost to domestic production of 41 critical APIs in the form of fermentation-based and chemical synthesis products.
This move has already started to bear fruit. More than 50 production projects have been approved under the PLI for APIs, and some of them have already initiated commercial production.
Companies on both sides — large players and mid-sized units — are now preparing capacities for drugs like penicillin-G, streptomycin, and vitamin B1, building bottom-up resilience.
India exported over $27.9 billion worth of pharma products in FY23. To maintain leadership in regulated markets across the world, scale, compliance, and quality need to move hand in hand. The PLI scheme will precisely do that, move India from its current status as a volume leader to a value power.
By supporting local API and complex generic manufacturing, the scheme supports India’s supply chain strength to match the requirements of global buyers, who are now proactively de-risking their buying plan.
The policy-driven industrial push is timely, as global pharma majors seek substitute supply partners amid geopolitical tensions and regulatory shifts.
Besides, with performance-based regulatory incentives, India is also attracting international Contract Development and Manufacturing Organisations (CDMOs) and investors eager to leverage the country’s manufacturing strength.
Such partnerships are expected to drive deeper integration of India in global pharma value chains.
The multiplier effect of the PLI scheme is very extensive. Government estimates say that the pharma PLI schemes alone will generate more than 1,00,000 direct and indirect employment opportunities.
Additionally, certain state governments have launched specialised pharma parks and industrial clusters to promote the pharma ecosystem around API manufacturing, formulation units, packaging, and quality control.
The bigger PLI scheme covering 14 sectors has itself mobilised over ₹1.6 lakh crore investments and created 11.5 lakh jobs already. Pharma and electronics accounted for 70 percent of the total incentives awarded so far, effectively making them their first preference in India’s growth strategy.
At the practical level, this means that not only is the industry manufacturing drugs, it is manufacturing livelihoods, infrastructure, and local economic development.
Andhra Pradesh, Himachal Pradesh and Gujarat have become industrial resurgence hotspots following investment precipitated by PLI.
While the PLI scheme is mostly focused on manufacturing, the longer-term impact on innovation will be significant. By incentivising companies that produce high-value formulations, such as complex generics, injectables, and biosimilars, it is compelling the industry to move up the value chain.
Pharma companies are investing increasingly in Research and Development (R&D) for high-margin and speciality products, most often in orphan drugs, oncology, and injectables. This is gradually changing India’s image as a bulk producer of generics to that of a cradle of drug innovation.
Although PLI does not support research directly, its market-linked strategy supports the commercialisation of frontier manufacturing technologies and new molecules. Innovation and performance need to go hand in hand.
While the scheme has demonstrated promising early returns, challenges are many. For long-term success, a regulatory first approach, reaching desired levels of production and more importantly, timely disbursement of finances are an absolute must.
Additionally, Micro, Small, and Medium Enterprises (MSMEs) and other smaller players are still finding it difficult to access the scheme due to high cut-offs and compliance thresholds.
However, the way is clear. The PLI scheme has given a much-needed push to India’s pharma industry. It is helping the industry shed its past low-margin, high-volume reputation and adopt a vision of high-value, innovation-led, and robust growth.
The PLI scheme is not just a government stimulus; it’s a larger vision for the future of pharma in India. By giving priority to domestic manufacturing, world-class excellence, jobs, and innovation, it is transforming the future of Indian pharma.
(Views are personal. Edited by Muhammed Fazil.)
