Abstract
The COVID-19-induced disruptions in the global supply chains and growing geopolitical sensitivities of governments and multinational corporations (MNCs) are increasingly resulting in China plus one strategy in order to ensure supply chain resilience. This strategy is expected to benefit countries like India in sectors such as pharmaceuticals. Having faced the brunt of excessive reliance on a single country for supplies during the pandemic, India launched a product linked incentive (PLI) scheme in July 2020, covering 41 products, to incentivise domestic production of key starting materials (KSMs), drug intermediates (DIs) and active pharmaceutical ingredients (APIs) with the objective of reducing dependence on China. Launching at a time when countries and firms were actively considering the strategy of supply chain diversification, this scheme was perceived to be perfectly timed. However, the response of the industry was not on the expected lines. This article analyses the early trends coming from the implementation of the scheme and looks into the reasons for the lukewarm response of the industry. It identifies three areas—creating confidence among the investors, accommodating micro, small and medium enterprises (MSMEs) and involving public sector enterprises—where more attention is needed to make India self-reliant in APIs and their DIs and KSMs.
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