The Union Ministry of Chemicals and Fertilizers may soon propose a Pharmaceutical Technology Upgradation Fund (PRUF) for providing interest subsidy to small and medium scale drug units.

The maximum loan that can be availed through PRUF would be Rs 2 crores for a period not exceeding 5 years. The fund would be utilised to subsidise the interest burden of the small and medium scale units that avail loans for upgrading their manufacturing facilities. As per the current plan, the reimbursement would be to the tune of five per cent on the interest charged by the identified financial institutions on the sanctioned loan. Small Industries Development Bank of India (SIDBI) will be the nodal agency for the programme. However, the announcement of the programme would depend upon the finance ministry approval.

The ministry is known to have asked SIDBI to submit a detailed operational framework for the programme. The details are to be finalised within a few weeks. The PRUF scheme has been worked out after collecting sufficient industry feedback on the matter. The ministry had recently invited comments from the industry experts within the government and outside to finalise the scope of the scheme, capital subsidy v/s interest subsidy, eligibility criteria, definition of technology upgradation, eligible machinery, areas that needs to be covered under the scheme and its relationship with the existing credit linked capital subsidy scheme available for the small scale industries.

The decision to set up PRUF has come in the wake of the changes in the IPR regime, amendments in Schedule M of Drugs and Cosmetics Act and modifications in the central excise duty structure. The government has acknowledged the fact that these developments have put the SSIs in a difficult position where they are compelled to make definite choices in terms of products, quality standards, prices, production, R&D, marketing and organisation to stay in the race.

The sub group of National Manufacturing Competitiveness Council (NMCC) that looked into the problems of the pharmaceutical industry had also suggested the setting up of a technology upgradation assistance scheme for the small and medium scale industries in the sector.