Pharmaceutical and medical technology firms in India are urging the government to expand the Production-Linked Incentive (PLI) scheme in the upcoming Union Budget 2026 to explicitly include active pharmaceutical ingredients (APIs). The demand comes alongside other policy asks like restoration of enhanced R&D tax deductions and rationalising import duties on advanced medical equipment.
Why extend PLI to APIs
Industry groups such as the Indian Pharmaceutical Alliance (IPA) argue that:
*Self-reliance in critical drug inputs is key, given supply chain disruptions and geopolitical challenges.
*Covering APIs under PLI would boost domestic manufacturing, reduce dependence on imports (especially from China), and strengthen the resilience of India’s drug supply chain.
*Enhanced incentives could help companies scale up production and innovate in complex generics, biosimilars, and vaccines.
Current PLI status for APIs
The Department of Pharmaceuticals (DoP) has already implemented a PLI scheme for bulk drugs, key starting materials (KSMs), drug intermediates and APIs with deadlines for application windows being extended multiple times (e.g., the API/KSM application submission window has been extended through January 16, 2026) to allow more participation.
Industry context and broader policy moves
The government has taken other steps to support local API production, including setting minimum import prices on select pharma inputs to discourage predatory pricing and protect domestic producers. PLI schemes in the pharma space have been credited with creating new domestic manufacturing capacity and reducing import dependence.
What this could mean
If APIs are formally brought into the PLI framework with extended incentives:
*Increased investment and capacity building in API manufacturing
*Enhanced supply-chain security for critical drugs
*More R&D focus on complex molecules
*Potential export opportunities for Indian API makers
Looking ahead
As reported by the economictimes.com, the focus is now on how Budget 2026 will respond to these industry proposals and whether policymakers will broaden the PLI’s scope to ensure greater domestic API competitiveness.
