DoP Revises Pharma Technology Scheme to Boost MSME Upgradation

The aim is to attract more micro, small, and medium enterprises (MSMEs) to modernize their facilities.

The Department of Pharmaceuticals (DoP) has revised the guidelines for its Revamped Pharmaceutical Technology Upgradation Assistance Scheme (RPTUAS) under the Strengthening of Pharmaceutical Industry (SPI) initiative.

The aim is to attract more micro, small, and medium enterprises (MSMEs) to modernize their facilities.

Furthermore, the modifications, notified on September 17, 2024, focus on increasing the maximum incentive and broadening the scope of expenditures covered for subsidy calculation.

Key Changes: Pharma Technology Scheme

The key change is the revision of the maximum incentive limit under the scheme, which has been doubled from INR 1 Cr to INR 2 Cr. This upward revision aims to make the scheme more attractive for MSMEs, which often face financial challenges in upgrading their facilities to meet updated regulatory standards. The average turnover criterion for eligibility, however, remains unchanged.

Additionally, the revised guidelines now allow the inclusion of production equipment expenses when calculating subsidy amounts.

Previously, only utilities such as HVAC, clean rooms, and testing labs were considered. This expansion is expected to ease the financial burden on pharma units seeking to improve manufacturing capabilities.

The Department has also simplified the application process by replacing the “detailed gap analysis” requirement with a “normal gap analysis.” This change aims to make it easier for companies to apply for the scheme online.

Under the revised scheme, pharmaceutical companies can apply online using the new guidelines. "Pharma units will apply online in the prescribed proforma for shortlisting under the scheme with a gap analysis of the existing manufacturing unit," the DoP stated, highlighting the removal of the "detailed gap analysis" requirement. The goal is to streamline applications and ensure faster processing.

The incentive structure remains based on turnover:

- Units with a turnover of INR 1 Cr to less than INR 50 Cr can claim 20% of their investment under eligible activities.

- Units with a turnover of INR 50 Cr to less than INR 250 Cr will receive 15%, and

- Those with turnovers between INR 250 Cr and INR 500 Cr will receive 10%.

The first subsidy installment, capped at 50% of the eligible amount, will be released within 30 days of submitting the necessary documents. The upper limit for this first tranche has been increased from INR 50 lakh to INR 1 Cr, and the second and final installment will now be capped at INR 2 Cr.

Industry’s Response to Revised Scheme

The central government announced during the recent parliament session that over 100 applications had been submitted under the RPTUAS since the application window opened on April 11, 2024. Of these, seven applications, all from MSMEs, have been approved.

In a statement to the Lok Sabha, J P Nadda, the Minister of Chemicals and Fertilisers, said, “Under Revamped PTUAS Scheme, more than 100 applications have been received, and seven (07) applications have been approved, all of which are MSMEs.” He added, "The sanction/approval letters have been issued to all approved applicants."

The DoP reiterated its commitment to supporting MSMEs, stating that it aims to provide “maximum benefits” to these companies under the RPTUAS sub-scheme. The revised scheme will now focus on facilitating easier compliance with regulatory standards and providing financial aid in a more streamlined manner.