Research linked Incentive scheme

Why in the News?

The Ministry of Science and Technology has written to the Finance Ministry to introduce a Research Linked Incentive (RLI) scheme for the Pharma sector in the upcoming budget of 2024-25.

What is Research linked Incentive scheme?

1. The RLI scheme has been envisaged on the lines of production-linked incentive (PLI) scheme, to give stimulus to research and development in the field of Science and Technology (S&T).
2.  The incentives provided to the companies shall total an outlay of Rs. 100 Crore per year, with incremental annual spending in the forthcoming years.
3. RLI also incorporates policy interventions to harness India’s inherent potential.
4. The scheme shall operate in addition to the existing incentive R&D schemes available for the Pharma and biotech companies operating in India.

Possible benefits of the scheme:

1. The incentives provided by the scheme shall enable firm push to Research and development to boost Innovation, that can help to improve India’s ranking in the Global innovation Index (GII) further.

2. Promotes innovation in emerging fields of S&T:
   1. Electric vehicles (EV)
   2. Hydrogen and renewable energy
   3. Sustainable technologies
   4. Artificial intelligence (AI) based smart technologies involving Machine Learning
   5. Semiconductor designing and manufacturing.
3. Research-linked incentives given sector-specific enables development of sustainable and green technologies in the future.
4. The scheme shall enable India to shift away from a low-value, high-volume player to a high-value, high-volume player in the global pharma market.

About:

Research & Development in the Pharma sector:

1. The Pharma R&D processes involves:
   1. Pre-clinical research
   2. Discovery of innovative drugs
   3. Clinical trials of prescription drugs
   4. Preparation and submission of applications for Food and Drug Administration or FDA approval
   5. Designing production processes for the new product
   6. Clinical testing of a new drug against an existing drug to showcase the benefits of the new drug.
   7. Additional clinical trials after a new drug reaches the market
      1. for safety monitoring
      2. Detection of additional side effects that may not have been observed in earlier trials during development
   8. Improvements over existing prescription drugs by developing new dosages and delivery systems and testing for additional potential uses
2. India’s R&D in Pharma sector:
   1. The gestation period for translation of concept to market may take about 10-15 years, with a >90% attrition rate in the Indian pharma industry.
   2. The need for a early innovation and a cushion for handling the risk of capital needs given the high failure rate stresses the importance of incentives in R&D sector in India.
   3. The average pharma industry funding continues to be around 10%, compared to 15-20% for most large innovators globally. 
   4. Though government grants are provided especially from BIRAC (e.g., the Biotechnology Ignition Grant) and MeiTY, which accounts for about Rs 5-50 lakhs over 6-18 months, it remains largely insufficient for the entire development cycle of drugs.
   5. The R&D Expenditure of India stands at 0.8% of the GDP, way lower than the developed and emerging economies of the world.

UNESCO: R&D intensity as a percentage of GDP (2018)