With the Good Laboratory Practices (GLP) requirements being made mandatory from November this year, the Department of Pharmaceuticals (DoP) is going to introduce the new plan called “Pharmaceuticals Credit Linked Capital Subsidy Technology Upgradation Scheme” for compliance to GLP by the Small and medium Enterprises.

The essence of the scheme is to extend capital subsidy on loan/institutional finance availed by the SMEs for such technology upgradation. Under the scheme, the Centre will give financial assistance by giving 25 per cent upfront capital subsidy to pharma SMEs on loan/institutional finance availed by them from identified primary lending institutions like scheduled banks and financial institutions for new equipment and machineries required for compliance to Schedule L-1, limited to the project cost of upto Rs.1 crore and thus the total capital subsidy limit will be Rs.25 lakh per SME, sources said.

“In order to provide/make available good quality medicines at affordable rates, it becomes necessary for the Department to ensure more and more SMEs adopt GLP standards by the target date. It has been felt that since the SMEs will require huge capital for technological upgradation of their laboratories for making them fully compliant to Schedule L-1 to Drugs and Cosmetics Rules, 1945. Hence they require financial assistance to meet the new challenges. It is therefore necessary to make an operational assistance scheme with a view to ensuring good quality of drugs and formulations. This new scheme was prepared with this purpose of assisting the SMEs to help set up GLP facilities in their manufacturing units,” sources in the department said. The department had already held discussions with the industry about the details of the scheme recently.

“The capital subsidy under this scheme shall be available only for such projects where term loans have been sanctioned by the financial institutions. The 25 per cent capital subsidy will be worked out on the eligible investment amount under the scheme and would be released to the beneficiary unit on pro-rate basis along with disbursement of loan sanctioned for technology upgradation,” as per the proposal.

“The capital subsidy will be treated as non-interest bearing term loan by the bank/FIs. The repayment schedule of the term loan however will be worked out excluding the subsidy amount and subsidy will be adjusted against the term loan account of the beneficiary after a lock in period of three years on a pro-rate basis in terms of release of capital subsidy,” it said.