API crisis, again: PLI in key pharma ingredients was supposed to reduce dependence on China. But the job’s only partly done

Source: The post is based on the article “API crisis, again: PLI in key pharma ingredients was supposed to reduce dependence on China. But the job’s only partly done” published in The Times of India on 22nd December 2022.

Syllabus: GS 3 – Economy

Relevance: India dependency on imports for APIs

News: The article discusses the impact of dependency on China for Active Pharmaceutical Ingredients (APIs) and measures adopted by India to counter it.

What is the recent issue?

The prices of key Active Pharmaceutical Ingredients (APIs), which are the essential ingredients in making medicines, have increased recently by 12-25%

This is because China has stocked basic medicines leading to a shortage in the supply chain and increase in the price.

Why India imports APIs from China?

India has the capability to make many key APIs. However, it is the cheap cost provided by China that has made India dependent on imports and incapable of making key APIs.

APIs and key starting materials used in the production made up 63% of total pharma imports for 2018-19. This highlights the need for India to reduce its imports.

What has the performance of PLI scheme in pharma ingredients?

India introduced a PLI scheme in July 2020 to encourage domestic manufacture of a target group of 41 products, including aspirin and penicillin.

According to the recent data, 51 companies had received approval under the PLI scheme to begin new plants to make APIs. However, only about 25-30% of the companies have begun manufacturing.

Even though India has prioritised the PLI scheme through budgetary support, it has not seen the desired result.

What is the way ahead?

India has a good history in pharmaceutical manufacturing and has all the capabilities. Therefore, India needs to use its strength and execute its PLI scheme rapidly to reduce its dependence on China.