The Central Government has relaxed the timeline for setting up medical devices manufacturing factories. Applicants across all segments will now have 3 years to set up their facilities before the five-year performance period. (AI-generated image)To promote domestic manufacturing of medical devices, the Central Government has extended the tenure of the Production Linked Incentive (PLI) scheme for manufacturers by eight years and eased the sales and investment requirements. The decision comes even as almost 80 per cent of the scheme outlay of Rs 3,420 crore remains unutilised.Additionally, changes have been made to the scheme to make it more lucrative for the industry.The changes were made in consultation with the industry to ensure better utilisation of the scheme, according to persons in the know of the matter.“Approximately Rs 2,700 crore is presently available for disbursement under the scheme,” said a notice by the Department of Pharmaceuticals, inviting fresh applications under the revised scheme.Also read | Stents to syringes: Serious harm reports surge, but makers remain unnamedThe notice stated that applicants who were approved prior to October 31 will continue to be governed by the previous set of guidelines.The Department of Pharmaceuticals has extended the tenure of the scheme from the current 2027-28 to 2035-36, during which time the remaining outlay of Rs 2,700 would be utilised.“Based on learnings in the first phase of the scheme, a number of simplifications have been made in the eligibility conditions as well as the procedure for claiming incentive by the applicants,” a statement by the department said.Story continues below this adThe simplifications include a relaxation in the timeline for setting up factories. Applicants across all segments will now have three years to set up their manufacturing facilities before the five-year performance period.The scheme divides the medical device industry into four segments — Medical consumables, disposables, and implants (TS1), Critical components for manufacturing of medical devices (TS2), high-end medical devices whose manufacturing within the country is at a nascent stage (TS3), and high-end medical devices for which only assembly operations exist in India (TS4).The revised scheme also does away with the requirement for minimum sales thresholds for getting the incentive. Instead of the previous fixed incremental growth in sales that the companies had to show each year to claim the incentives, the new guidelines say that the companies have to show a percentage annual growth over the base year.The minimum investment thresholds have also been relaxed. Manufacturers with annual turnover of less than Rs 150 crore over the last three years must invest Rs 50 crore, while companies with higher turnover have no minimum requirement. For products belonging to TS1 and TS3, the investment has to be in greenfield manufacturing facilities, while for products in TS4 the investment could be for achieving higher value chain integration. There is no minimum requirement for TS2.Story continues below this adThe revised policy has also eliminated a uniform, sales-based flat incentive structure. The new guidelines have created a segment-specific tapered incentive rate, averaging ~5% for TS1, ~9% for TS2 and TS3, and 6% for TS4.Industry reactionWith the government doing away with the minimum investment requirements, investors can choose their own entry point. They also get three years to set up the facilities and have a longer application window.Also read | Cancer drugs prices could fall by 70% as government plans profit margin caps“This is a more practical and investor-friendly design, and should see greater success. The first phase was restrictive, organised around specific clinical and equipment categories. This phase is aimed more broadly at what India still needs to build next: scale in everyday consumables, the critical components that go inside devices, and high-end equipment that is still imported or only assembled here,” said a statement from Medical Technology Association of India (MTaI).Simplification of scheme guidelines, discontinuation of the minimum sales threshold requirement for claiming incentives, and reduction in the minimum investment requirement will make the scheme more accessible, flexible and attractive to both existing manufacturers and new investors,” said Himanshu Baid, Managing Director, Poly Medicure.Story continues below this ad“These changes reflect the government’s responsiveness to industry requirements and will encourage wider participation and fresh investments,” said Baid.Anonna Dutt is a Principal Correspondent who writes primarily on health at the Indian Express. She r... Read More