Critically examine how PLI schemes can reduce India's import dependence in strategic sectors, with reference to bulk drugs.

The PLI Scheme for Bulk Drugs — ₹6,940 crore for 41 critical bulk drugs over 2020-21 to 2029-30 [1] — tests whether an output-linked subsidy can convert a strategic vulnerability into domestic capacity. The bulk drug experience shows PLI creates capability, but does not by itself end dependence.

How PLI reduces import dependence

• Backward integration: incentives are confined to greenfield plants for Key Starting Materials, Drug Intermediates and APIs [3], attacking the upstream gap rather than the formulation stage where India is already strong.
• Restoration of lost capacity: domestic Penicillin G manufacture has been revived after about three decades [1] — the starting material for 6-APA, amoxicillin and ampicillin.
• Crowding-in of investment: realised investment under the scheme has exceeded the committed amount [1], with imports avoided and exports earned.
• Risk-calibrated design: a higher incentive for fermentation-based products (20%) than chemically synthesised ones (10%) [3] recognises the costlier route.
• Payment only against production, limiting fiscal risk from non-performing projects.

Why the gains remain fragile

• The price gap persists: about two-thirds of bulk drug and intermediate imports still come from China, continuing for economic considerations [2]. Capacity next door does not compel a buyer to pay more.
• Time-bound support, structural disadvantage: PLI does not lower the power and effluent-treatment costs that make Indian fermentation dearer; after the incentive lapses, plants face the same gap.
• Incomplete rollout: not all 48 approved projects are yet commissioned [1], and coverage is limited to 41 identified molecules.
• No assured offtake, leaving viability hostage to import prices.

PLI is best judged as insurance against supply shocks rather than as a cost-saving industrial policy — and insurance is rightly bought selectively. Its gains will endure only if paired with the infrastructure side: completing Bulk Drug Parks with common effluent treatment, solvent recovery and assured power [5], as the Katoch Committee envisaged through park-based shared utilities [4], and linking public procurement to high domestic value addition. Sustained cost competitiveness, not commissioning alone, is the true test of Atmanirbharta in strategic sectors.