Laghu Udyog Bharati seeks changes in selection criteria for MSME applicants under PLI scheme

Mumbai, August 14, 2021:

In a bid to ensure that MSMEs avail incentives under Rs. 15, 000 crore production linked incentive (PLI) scheme for pharmaceuticals, Laghu Udyog Bharati, an all India organization of micro and small industries, has urged Union chemicals and fertilizers ministry to introduce changes to selection criteria of the scheme for MSME applicants. These include bringing back the criteria of committed investment, inclusion of R&D expense and number of regulatory certifications under the selection criteria for MSME applicants etc.

As per the operational guidelines for PLI scheme issued by department of pharmaceuticals (DoP) on June 1, 2021, about 20 eligible MSMEs will be selected to avail incentives under the scheme.

The lobby group in a representation to Union chemicals and fertilizers minister Mansukh Mandaviya recently requested to reintroduce the criteria of committed investment for selection criteria of the PLI scheme for the MSME applicants which was removed vide corrigendum dated July 22, 2021 as now MSME will get no marks for investment.

The corrigendum issued by the DoP stated weightage of 50 per cent for MSMEs would be based on the global manufacturing revenue (GMR) from pharmaceutical goods in FY 2019-2020. In the operational guidelines issued on June 1, 2021, the 50 per cent weightage was on total investment committed by the applicant under the scheme, for MSMEs.

With the change in selection criteria, MSMEs which do not have major revenue in FY 2019-20 but are in process of making a big investment for quality products for India and global markets are not eligible to apply for the scheme, said Amit Chawla, national executive member, pharma wing of Laghu Udyog Bharati.

“This may encourage companies to import goods from China and other countries and process in the country, thus reducing the job generation. As when we do core manufacturing from basic raw materials we in true sense make India self-reliant, not be dependent on other countries (in emergency/war/disaster/pandemic situation) and importantly it will generate a lot of jobs for skilled and unskilled manpower. 50 per cent of India is young India and job creation, innovations and encouraging budding entrepreneurs is our moral responsibility,” said Chawla who is also vice president of Indore unit of Laghu Udyog Bharati.

Laghu Udyog Bharati further appealed to the ministry to include R&D expense of applicant/group company over past five years in the selection criteria (clause 4 of the guidelines) for MSME applicants.

“MSMEs’ investment in R&D activities over the last five years is only way they can grow in creating innovative and differentiated products. To support and acknowledge their efforts, there should be inclusion of investment in R&D/innovations as one of the important selection criteria for MSMEs under the new PLI scheme. Investing in R&D will generate jobs for skilled manpower. Utilization of skilled manpower is one of the important tasks for India. Country which will invest in innovations will be the global leader,” he said.

Various regulatory certifications like US FDA/EDQM/EMA/BfArM/UK MHRA/PMDA/Health Canada/TGA/ANVISA ANDA/NDA/DMF/CEP/national award for existing units should be considered as one of the selection parameters for MSME applicants, the lobby group said, adding that the global regulatory certificates of the MSMEs should not be compared with their proposal for new unit.

“Most of the MSME units will not have many different plants and sometimes two or three small plants can be accommodated in a single plant. So, the additional criteria of number of regulatory certification need to be considered from reputed global regulatory authorities. Some of the MSMEs are also registered at department of scientific industrial research. Also we believe that recognition in terms of national award winner should also be considered as selection criteria,” said Baldev Prajapati, national president, Laghu Udyog Bharati.

The lobby group also urged the ministry to further categorize 20 MSMEs (as per PLI scheme) into two groups, first group should be comprised of minimum 10 SSIs having Rs. 50 crore domestic turnover and second group should be of 10 medium scale units having Rs. 250 crore domestic turnover.

MSMEs are contributing 45 per cent in country’s export. This is a great contribution towards make in India despite their small capital base and other limitations. So out of the total PLI budget outlet, at least 45 per cent should be reserved for the MSMEs to further increase the MSME exports as such PLI II scheme presently is going to benefit large industry only, said Prajapati.

The industry body requested the ministry to extend the last date of the PLI scheme till September 30, 2021 in view of the above changes. PharmaBiz