The SPI scheme should benefit MSMEs in the pharmaceutical sector
The Department of Pharmaceuticals (DoP), under the Union Ministry of Chemicals and Fertilizers, has recently combined existing programs for the development of pharmaceutical industries into a single “Strengthening the Pharmaceutical Industry” program ( SPI) to strengthen the existing infrastructure with a total financial outlay of Rs 500 crore. Under this program, the central government will provide financial assistance to pharmaceutical clusters for the establishment of joint facilities to improve the quality and ensure sustainable growth of pharmaceutical clusters in the country. The program further aims to upgrade the production facilities of Micro, Small and Medium Enterprises (MSMEs) to meet national and international regulatory standards, through interest subsidy or capital subsidy.
The new program will also promote knowledge and awareness in and about the pharmaceutical and medical device industry by undertaking studies, creating databases and bringing in experts from various fields to share their knowledge. The program will include the three existing sub-programs – Assistance to the Pharmaceutical Industry for Common Facilities (APICF) to strengthen the existing capacity of the pharmaceutical cluster through common facilities; Pharmaceutical Technology Upgrading Assistance Program (PTUAS) for MSMEs with a proven track record of meeting national and international regulatory standards; and Program for Promotion and Development of Pharmaceutical and Medical Devices (PMPDS) to conduct study/survey reports, outreach programs, establishment of database and promotion of the industry – as than its components.
At the cluster level, APICF plans to support the establishment of joint facilities such as testing laboratories, joint effluent treatment plants and other similar joint facilities by providing government support in the form of capital grant up to 70% subject to a cap. of a maximum of Rs 20 crore. In order to fill the knowledge gap, the third sub-programme proposes to carry out a series of sensitization programmes, conduct sector studies and organize similar such programs to generate soft inputs for policy advocacy. APICF will have a finance outlay of Rs 178.40 crore from 2021-22 to 2025-26, PTUAS will have Rs 300.10 crore and PMPDS will have Rs 21.50 crore as finance outlay for the same period. The APICF will meet the requirements of manufacturing units as a special purpose vehicle (SPV) with a minimum of five pharmaceutical units as members, to execute the joint facilities development project.
The limit of the incentive will be 70% of the approved project cost or Rs 20 crore, whichever is lower. In the case of Himalayan States and North Eastern Region States, the grant would be Rs 20 crore per cluster or 90% of the project cost of the common infrastructure facilities, whichever is less. raised. The DoP will provide overall policy coordination and program management support.
Of course, the SPI program will help the industry to improve its quality, upgrade its technologies and infrastructure and build its capacity and encourage collaboration among different stakeholders for the overall development of the sector. It should be noted that the program is designed with the aim of further enhancing India’s existing manufacturing prowess in the pharmaceutical industry. Bearing in mind the strategic role of MSMEs, which provide important backward and forward linkages to industry, and also bearing in mind that MSMEs tend to grow in clusters, these programs should address technology upgrading issues at both unit and cluster level. The program will focus on MSMEs and pharmaceutical clusters in the country. In order to strengthen the pharmaceutical industry supply chain where MSMEs are an integral part, the government will incentivize planned MSME units to acquire Schedule M certification or WHO GMP certification through the PTUAS sub-programme. Under the PTUAS sub-programme, the technological upgrade envisaged in the project proposal must now be completed within 30 months from the date of the first disbursement of the loans for interest subsidy. Initially, it was 18 months.
Pharmaceutical MSMEs who have availed the benefit of the interest subsidy scheme must complete the technology upgrade within 30 months of receipt of the first disbursement of the loan, otherwise the loan will be converted to a normal loan by the lending institution. The MSME unit will have the possibility to choose between a capital subsidy or an interest subsidy. Under this program, pharmaceutical clusters of MSMEs can develop common facilities for regulatory requirements and can also conduct research in collaboration with National Institutes of Pharmaceutical Education and Research (NIPER), so that they can support the industry’s shift from volume to value as the pharmacy of the world. Overall, the new program will prove to be a boon for MSME pharmaceutical companies.
(The author is a freelance journalist with varied experience in different fields)