In May 2026, the Department for Promotion of Industry and Internal Trade (DPIIT) released clarification on Phase-II PLI scheme eligibility criteria for bulk drugs and APIs, raising the minimum capex threshold and accelerating localisation benchmarks. For mid-sized manufacturers relying on PLI support to fund new facilities, the revised hurdles—combined with tightened audit windows—now demand immediate strategic review.
Non-compliance risks forfeiture of committed incentives and reputational damage in supply chains.
Market signals
Phase-II PLI now requires ₹50 crore minimum capex (up from ₹40 crore) for domestic API players to qualify. Documentation and third-party certification deadlines have moved forward by 120 days.
Year-1 and Year-2 domestic value-addition targets increased to 35% and 50% respectively. Imported raw materials and intermediates now subject to enhanced scrutiny via GST audit trails and DGFT e-invoicing linkage.
DPIIT has signalled stricter reconciliation audits starting Q3 2026. Companies missing capex or localisation milestones face 15–40% incentive recovery, with no grace period for force majeure claims filed after 31 July 2026.
Manufacturers must urgently reconcile planned capex against revised thresholds and validate localisation sourcing under new GST and DGFT reconciliation protocols. Vinayakam's compliance team helps pharma clients map capex schedules to PLI milestones, audit supplier chains for domestic-content certification, and structure contingency claims before the July clawback cut-off. We also advise on MCA filing updates (Board resolutions, MD certification) and FEMA repatriation limits if offshore raw-material costs shift.
Your action checklist
- Audit current capex plans against ₹50 crore Phase-II threshold; flag any shortfall and reallocate budget or seek co-financing by 30 June 2026.
- Map all raw-material and intermediate suppliers; obtain domestic-content certificates and reconcile via GST GSTR-1 and DGFT e-invoice records by 15 July 2026.
- File updated Board resolutions and MD certifications (per PLI audit template) with your DPIIT nodal agency by 31 July 2026 to lock incentive amounts.
- Engage BIS or third-party auditor to validate capex invoice documentation and localisation claims before 30 September 2026 interim review milestone.