Production Linked Incentive schemes in pharmaceuticals and medical devices have reduced import dependence but raise questions of fiscal cost and sustainability. Discuss.

The Department of Pharmaceuticals runs three PLI schemes — Bulk Drugs (₹6,940 cr), Pharmaceuticals (₹15,000 cr) and Medical Devices (₹3,420 cr) — to secure critical APIs and high-end devices under Atmanirbhar Bharat [1]. Physical capacity has genuinely returned, but its fiscal efficiency and post-incentive durability remain untested.

Gains in reducing import dependence

• Bulk drugs: 39 projects covering 28 APIs/KSMs commissioned; fermentation-based Penicillin-G, Clavulanic Acid and Rifampicin are made domestically again — capacity no private firm would have restarted unaided [1].
• Pharmaceuticals: ₹46,744 cr invested against a ₹17,275 cr target, with 1,21,294 jobs and about 64% of sales exported, i.e. sold at world prices [1].
• Medical devices: production of 57 unique devices has begun — MRI, CT, cath labs, linear accelerators — with global firms localising operations [1].
• Capacity now exists for 28 of 41 identified critical products [3].

Questions of fiscal cost

• Against ₹25,360 cr committed, the releases report investment, sales and jobs but not incentive actually disbursed — so cost per job or per rupee of output cannot be computed [1].
• Investment 2.7 times the target invites the reading that part of it was inframarginal, i.e. coming anyway.
• The device incentive of 5% on incremental sales can reward ordinary sectoral growth [1].

Questions of sustainability

• Roughly two-thirds of bulk drug and intermediate imports still come from China, "mainly due to economic considerations" [2] — Indian plants must beat that price once the five-year support ends [1].
• Bulk drug exports are only ~15% of its sales, showing limited global cost-competitiveness [1].
• 13 critical products remain uncovered [3], and devices — where 86% of requirement is imported [3] — got the smallest outlay [1]; assembly of imported high-value parts merely shifts dependence down the chain.

PLI has rebuilt manufacturing at the finished-product end faster than at the raw-material end. Completing the Bulk Drug Parks (₹3,000 cr; Himachal Pradesh, Gujarat, Andhra Pradesh) to permanently lower running costs [4], publishing disbursement data for CAG and parliamentary scrutiny, and linking device incentives to India-made components would convert a time-bound subsidy into lasting self-reliance in healthcare.