Time to rework on PTUAS norms to make it industry-friendly

A parliamentary panel, headed by Shashi Tharoor, has asked the Department of Pharmaceuticals (DoP) to look into the reasons for industry’s lukewarm response to ‘Pharmaceutical Technology Upgradation Assistance Scheme' (PTUAS), a central sector scheme of Strengthening of Pharmaceutical Industry (SPI). DoP has been directed to take remedial measures after discussion with the industry.

Launched by the government on July 21, 2022, PTUAS is among three sub-schemes of SPI aimed at strengthening pharma MSMEs. PTUAS is a credit-linked scheme under which applications were invited from August 1, 2022, which could be registered on the portal developed by SIDBI, the scheme’s Project Management Consultant (PMC). The scheme aims to facilitate proven MSMEs to upgrade their technology to meet WHO-GMP or Schedule M standards. The Indian pharmaceutical industry is the world’s 3rd largest by volume and 14th largest in terms of value. And India has the second-highest number of US FDA approved plants outside the US.

Indian pharma exports witnessed a growth of 103 per cent since 2013-14, from Rs. 90,415 crore in 2013-14 to Rs. 1,83,422 crore in 2021-22. The year 2021-22 was the pharma sector's best export performance ever. However, only 1,235 of 6,000 MSMEs in the country have WHO GMP certification.

The launch of SPI scheme is significant as it envisages technology upgradation, setting up of common research centres and effluent treatment plants in clusters for pharma MSMEs, which can enhance their product quality and exports. Unfortunately, the response to PTUAS has been rather lukewarm.

Now, the Department Related Parliamentary Standing Committee on Chemicals and Fertilisers is keen on finding out the real reasons for such a disappointing response to PTUAS. The scheme aims at facilitating MSMEs with a proven track-record to meet national and international regulatory standards (WHO-GMP or Schedule-M) with provisions for interest subvention or capital subsidy on their capital loans.

The parliamentary panel noted in its report that during 2020-21 and 2021-22, against the token allocation of Rs. two lakh and Rs. one lakh, respectively, there was nil utilization of funds. Though a higher allocation of Rs. 62 crore was made at the budget estimate stage for 2022-23, it was reduced to Rs. one crore at the revised estimate stage of the fiscal and again there was nil utilization of funds. As a result, the physical target of upgrading 500 and 150 MSME units during 2020-21 and 2022- 23, respectively, was also not achieved.

It is time the government zeroes in on the factors for the poor response and introduces remedial measures in order to see that PTUAS evokes a more encouraging response, the panel stated. In its bid to attract the attention of the industry, the DoP modified certain clauses in the PTUAS guidelines in January. It allowed companies that had availed loans from RBI-approved Public Financial Institutions (PFIs) to also enjoy the scheme benefits. The DoP modified clauses related to five per cent interest subvention for loan components eligible under the scheme and the one which seeks the beneficiary to submit bank guarantee at the time of applying for the first interest subvention claim. Till then only loans sanctioned by any scheduled commercial banks in the public and private sector were eligible for the scheme and the bank guarantee had to be from any scheduled commercial bank. With the modification, loans from the PFIs registered with RBI and the bank guarantee from such PFIs are acceptable under the PTUAS. According to the Scheme, up to maximum of five per cent per annum (six per cent in case of units owned and managed by SC/STs) of interest subvention for loan component eligible under the scheme taken to the upper limit of Rs. 10 crore and for a maximum period of three years on reducing balance for sanctioned loans by any scheduled commercial banks.

Even after this revision, the industry is not showing any interest in the scheme. Now, the government should take immediate corrective measures to ensure that allocation of Rs. 95 crore for PTUAS scheme during FY 2023-24 is fully utilized. Towards this, it should seriously consider a further revision of the guidelines so as it make it more attractive for the industry to come on-board.