The Siddha medicine industry in Tamil Nadu has demanded complete waiver of Goods and Services Tax (GST) on Siddha medicines manufactured in accordance with the formulae given in the authoritative books specified in the first schedule of the Drugs and Cosmetic Act and sold under generic names.
The country’s paradigm shift to the GST structure from July 2017 is likely to affect severely the Siddha medicine industry in the state, so the government should exempt it from the purview of goods and services tax, wrote Dr T Thirunarayanan, secretary of Centre for Traditional Medicines and Research (CTMR) to the Union Finance Minister.
Though the state has a tradition and credit on account of Siddha system, only 26 companies are exclusive manufacturers of Siddha medicines in the private sector. The government owned, Tamil Nadu Medical Plant Farms & Herbal Medicine Corporation Limited (TAMPCOL) and the cooperative sector enterprise, the Indian Medical Practitioners Co-operative Pharmacy and Stores Limited (IMPCOPS), together contribute 40 per cent of the total turnover of Siddha. These two companies manufacture all Ayush medicinal products and supply to the government health centres and deal with private marketing agencies. The remaining 60 per cent comes from private sector.
Unlike other Ayush drugs, most of the Siddha medicines come under generic category. All these medicines are manufactured following the principles prescribed in the classical texts which are specified in the first schedule of the Drugs and Cosmetic Act. Currently it has only 2% tax (excise duty). Once the GST is introduced the tax rate will go up by 12% which means a hike of 10% in tax. This will become unbearable for the manufacturers of Siddha drugs and it will severely affect the small clinics and private entrepreneurs, Dr Thirunarayanan observed.
Since the government controlled companies are also following the formulae of the classical texts for preparations, government cannot bear too much cost on raw materials and production due to the impact of GST. The revenue gain to the government by way of GST is very small. So chances are there for shortage of essential medicines listed in the essential drug list (EDL) of Siddha in all the government hospitals, PHCs and ESI hospitals. The situation will mostly affect the common man, he said.
The branded proprietary products have now 6% excise duty and they are exempted from VAT. But GST will bring 6% increase in their MRP, he pointed out.
Similar comments have come from the ayurvedic medicine manufacturers from Kerala. According to Dr. K.V. Vijith, general secretary of the Private Ayurveda Medical Practitioners’ Association (PAMPA), the GST tax structure will badly affect the Ayurveda sector. Prices of all the generic versions of Ayurveda products will go up by 12% in the MRP. Currently 5% VAT for classical drugs and 2% excise duty for proprietary drugs are levied. In this place the GST will force the manufacturers to hike the MRP rates.
He said PAMPA has requested the state government and the union government to reduce the rate into 5% otherwise it will affect the common man and also the industry. To a question he said there is very little increase in the cost of raw materials, hence the increase in the tax structure will affect only the consumers and no loss for the manufacturers.