India's PLI scheme facilitating VB1 production

    Summary: The DoP of India has issued an invitation to eligible API manufacturers in the country to apply for production of vitamin B1, so as to follow the PLI scheme.   

    The media in India reported on 27 July that the Department of Pharmaceuticals (DoP) of India has issued an invitation to eligible active pharmaceutical ingredient (API) manufacturers in the country to apply for production of vitamin B1 (VB1), so as to follow the production linked incentive (PLI) scheme. This decision was made during a meeting of the Empowered Committee (EC) of India on 3 June, 2022, in a bid to seek eligible enterprise candidates for VB1 production through chemical synthesis route.   

    It was also reported that the PLI scheme has been supporting the VB1 production that uses fermentation technique. The DoP of India earlier approved the respective application from two domestic enterprises—Optimus Drugs Pvt LTD and Sudarshan Pharma for producing 200 tonnes of vitamin B1; the EC of India has provided funds of USD4.41 million (INR350.00 million) and USD7.18 million (INR570.00 million) respectively for those two enterprises. (USD1=INR79.3350, the exchange rate on 1 Aug, 2022)   

    In early 2020, the export supply chain of China's API was temporarily hindered by the COVID-19 pandemic. And the Indian Government ratified the PLI scheme in March, 2020, in order to reduce India's dependence on China's API exports. In June, 2020, the Indian Government announced that it will provide financial support to Indian pharmaceutical manufacturers for the production of 53 APIs that are urgently needed in India, including VB1. In July, 2020, the guideline of PLI scheme was released; the second part of PLI scheme for promotion of domestic pharmaceutical manufacturing incorporates a list, "10 fermentation-based niche Key Starting Materials (KSMs) and APIs", which includes VB1.   

    India is one of the major export destinations of China's VB1. The volumes of China's VB1 exports to India for 2021 and H1 2022 both increased prominently, according to China Customs.   

    From 2017 to 2020, the annual volume of China's VB1 exports to India had been fluctuating around 380 tonnes, ranking fourth in all export destinations of China's VB1. In 2021, the volume of China's VB1 exports to India, ranking third in all export destinations of China's VB1, was 632.60 tonnes, up by 31.80% compared with 479.95 tonnes in 2020. In H1 2022, the volume of China's VB1 exports to India was 359.57 tonnes, exceeding 50% of that in 2021 and ranking second in all export destinations of China's VB1.   

    For the purpose of pharmaceutical production, India imports roughly USD2.52 billion (RMB17.00 billion) worth of APIs from China every year, which accounts for 43% of all of India's annual API imports. In downstream, VB1 is mostly used in the fields of medicines and cosmetics; those two fields take up 51% of total demand for VB1. As pharmaceutical industry in India develops, the increasing demand for VB1 has bolstered its imports from China; import volume has been at a high level and continues to grow over the recent years.   

    Despite the fact that the PLI scheme can promote VB1 production in India, the production capacity for VB1 in the country is still far from sufficient for fully meeting the domestic demand. Therefore, an industry analyst thinks that this will only have a small effect on China's VB1 exports in the short term.