Boosting Domestic Manufacturing in Pharmaceuticals: An Evaluation of the PLI Scheme’s Effectiveness

The Production Linked Incentive (PLI) scheme, introduced by the Department of Pharmaceuticals, aims to strengthen domestic manufacturing in India’s pharmaceutical sector by providing financial incentives to key segments, including Key Starting Materials (KSMs), Drug Intermediates (DIs), Active Pharmaceutical Ingredients (APIs), medical devices, and pharmaceutical drugs/Bulk drugs. This paper evaluates the scheme’s effectiveness across three critical sectors: KSMs/DIs and APIs, medical devices, and pharmaceutical drugs. It examines how the PLI scheme addresses India’s heavy reliance on imports, enhances production capacity, and fosters self-reliance. The study analyses the impact of the scheme on domestic supply chain resilience, cost competitiveness, and innovation in manufacturing. By assessing key performance indicators such as output growth, investment inflows, and export potential, the paper provides insights into the overall effectiveness of the PLI scheme. The findings underscore the scheme’s role in positioning India as a global pharmaceutical manufacturing hub while contributing to economic growth and healthcare security.