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Budget gives 200% boost to pharma sector as govt looks to curb dependence on China

Budget 2021 sets aside Rs 124.42 cr for initiatives aimed at 'Development of Pharmaceutical Industry'. In comparison, Budget 2020 set aside Rs 42.05 cr for the scheme.

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New Delhi: India’s first post-pandemic Budget has provided a boost of nearly 200 per cent for developing the pharmaceutical sector to help the country bolster its image as the ‘pharmacy of the world’.

In the allocation for the Union Department of Pharmaceuticals, which comes under the Ministry of Chemicals and Fertilizers, Budget 2021-22 earmarks Rs 124.42 crore for initiatives aimed at “Development of Pharmaceutical Industry”. 

In comparison, Budget 2020-21 set aside Rs 42.05 crore for the scheme, with the revised estimates pegged at Rs 34.05 crore. In 2019-2020, the scheme used Rs 3.29 crore. 

The big push for the pharma sector can be seen as an attempt by the government to wean India off raw material imports from China that are heavily used in local drug manufacturing. 

Indian drug-makers import around 70 per cent of their total bulk drug requirements from China. In 2018-19, the government informed the Lok Sabha in 2019, Indian drug-makers imported bulk drugs and intermediates worth $2.4 billion from China.

Last February, India found itself on the verge of a shortfall of essential medicines as China — the first country to report novel coronavirus infections — went into lockdown over Covid-19. 

The amount under the scheme, according to Budget documents, will go towards providing production-linked incentives (PLI) to promote domestic manufacturing of critical key starting materials (KSM), drug intermediates, and active pharmaceutical ingredients (APIs). 

KSM, API and drug intermediates are all raw materials required for making drugs.  

The allocation is also meant to encourage local production of medical devices with a similar PLI scheme. 

Also Read: Privatisation gets mega push in Budget 2021, most ambitious plan since Vajpayee era

‘Over-dependence on China great threat to drug security’ 

Last year, several experts had highlighted the fact that an over-dependence on China for medical imports could become “a great threat to the country’s drug security and national health”. 

“The pandemic is an eye-opener for the pharma industry, which is heavily dependent on China for active pharmaceutical ingredients and key starting materials (KSMs),” Udaya Bhaskar, Director-General, Pharmaceuticals Export Promotion Council of India (Pharmexcil), had told ThePrint at the time. 

Pharmexcil, which functions under the Ministry of Commerce and Industry, was set up in 2004 to promote pharmaceutical exports.

A 2020 report by Hong Kong-based equity research firm Haitong International Securities Group noted that the high level of dependence the Indian pharma industry has on China could impact Indian production of drugs for HIV, cancer, epilepsy, malaria, commonly-used antibiotics and anti-inflammatory drugs during the pandemic.

India, a leading supplier of medicines around the world, announced a curb on exports of certain essential medicines last year but it was eased after Chinese supplies resumed.  

Also Read: Tax slab changes, govt spending, reform agenda — your guide to read Budget 2021

Pharma industry ‘unhappy’ 

Officials of pharma lobbies — professional associations such as the Indian Pharmaceutical Alliances (IPA) and the India Drug Manufacturers’ Association — expressed dissatisfaction with the Budget allocation. Speaking to ThePrint, they said the amount is “negligible”. 

“If the government is serious in reducing the industry’s dependence on China, the investment required is in lakh crores, and not hundred crore. While the hike shows that the government has recognised the need to invest in the pharmaceutical industry, the amount allocated is of no real value,” a pharmaceutical industry veteran working with an industry association said. 

Another official echoed the concerns. “The task of reducing or eliminating dependence on Chinese imports is humongous and needs investments in a similar proportion,” the official said. “The allocation in the Budget is a mere formality.”  

Both officials requested anonymity, saying they will release official statements with “overall comments” on the Budget.

Also Read: Pandemic pushes India’s fiscal deficit to 9.5% in 2020-21, estimated at 6.8% in 2021-22


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