India is putting serious money into getting China off its back. On 24 February, the government promised promised PIB Cabinet approves Production Linked Incentive Scheme for Pharmaceuticals Read more Rs 15,000 crore ($2 billion) into a production linked incentive (PLI) scheme for pharmaceuticals. This comes after it initially announced announced The Hindu Businessline Centre announces ₹10,000-cr booster for local drug production Read more Rs 10,000 crore ($1.3 billion) in July 2020, when the scheme was declared.
The scheme, in essence, is supposed to bait pharma companies into producing raw materials domestically, so India can cut down on active pharmaceutical ingredients (API) being imported from China. Three Indian pharma companies—privately-run Aurobindo Pharma, PSU Karnataka Antibiotics and Pharmaceuticals, and a newly floated Kinvan Pvt Ltd—were mandated by the government to produce key APIs in 2020. These include penicillin G, 7-ACA, erythromycin thiocyanate, and clavulanic acid, which are key raw materials for making crucial antibiotics to treat everything from severe pneumonia to a simple throat infection.
Still, India remains extremely dependent on China for a large chunk of these essential ingredients. China accounted for 68% of India’s API imports in the year ending March 2020, according to data sourced from the Ministry of Commerce.
Of late, China has been upping its raw material prices upping its raw material prices ET Prime China carries out a pre-emptive strike Read more , inconveniencing India, but India, too, has been pushing for an atma nirbhar (self-reliant) drugs market. The government also allocated Rs 6,490 crore ($900 million) of the Rs 10,000 crore in subsidies for companies to put up new greenfield plants to produce raw materials. (Greenfield—production unit set-up from scratch—and brownfield—units built on existing plants—are the two types of production units.)
Covid was the wake-up call that brought about this push for independence.
In February and March of last year, the Chinese markets were shut due to the pandemic. Bulk API consignments of Indian pharma companies and MNCs were stuck stuck The Lancet Indian pharma threatened by COVID-19 shutdowns in China Read more in Chinese ports due to travel restrictions.