ET Bureau Dec 31, 2019, 07.35 AM IST

NEW DELHI: The government is set to roll out an interest subsidy scheme to help small pharmaceutical companies upgrade infrastructure and technology to globally accepted standards, subject to achieving export targets.

The Department of Pharmaceuticals proposes to bear 6% of the interest on loans up to Rs 8-10 crore for three years, through a public sector financial institution to be selected after open competitive bidding.

“The Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) will help small and medium enterprises and is intended to improve manufacturing practices. We have held extensive consultations with the industry and now are set to launch the scheme in February,” said PD Vaghela, DoP secretary.

The DoP has budgeted about Rs 300 crore for disbursal as interest subsidy for 2020-2022. The proposal will be taken up for final approval by the steering committee, a panel of experts under the department, on January 14. The committee will also set penalties for defaulters.

Drug companies that avail of the scheme will have to achieve incremental export revenue exceeding the loan amount within 36 months, failing which they will pay a penalty, and the amount borrowed will be converted into a regular loan.

“The subvention amount credited to the loan account with the sanctioning commercial bank/financial institution will stand withdrawn if the company defaults,” according to a government official requesting anonymity.

The objective is to help small and medium pharma enterprises upgrade from Schedule M, the good manufacturing practices (GMP) laid out in India’s Drugs and Cosmetics Act, to standards mandated by the World Health Organization, which will enable them to compete in the global markets and improve earnings.

The lender must ensure that the beneficiary company obtains WHO-GMP certification within two years from the date of first disbursement of the loan. The scheme will also allow procurement of new machinery. 

“Interest subvention against sanctioned loan by any scheduled commercial bank/financial institution, both in public and private sector, will be provided to medium enterprises of proven track record,” added another official.

“The scheme will boost Make in India as WHO-GMP is compulsory for participating in many tenders for supplying in government institutions. The scheme will also help companies to increase exports with strict safety regulations,” the official said.

Pharma groups welcomed the scheme, although some said the “export conditions” should be relaxed.

“The condition of export activity needs to be delinked from availing the loan. Export registration takes 3-4 years. Hence the DoP should not fix time limits,” a person affiliated with a pharma lobby group said on condition of anonymity.