Unrestricted import of bulk drugs and formulations into the country has been a matter of serious concern for the domestic pharmaceutical industry ever since the government commenced the process of liberalisation of foreign trade. Once a nation accepts globalisation as a part of growth strategy for the economy, the government finds it difficult to effectively control, sometimes, even certain undesirable imports. The Directorate General of Anti-dumping and Allied Duties has been doing its bit to check what is called dumping of bulk drugs into the country. To a great extend the policy of trade liberalisation did force to improve competitiveness of Indian industry which has been protected for a long period. Probably, pharma industry is one sector where the impact of the trade liberalisation has been felt quite seriously. During the last five years, pharma companies have either discontinued their bulk drug production or set up huge capacities and modernised their bulk drug manufacturing facilities. The small-scale sector of the Indian pharmaceutical industry, however, had to pay a price when several medium and small-scale drug units were forced to close on account of cheap import of bulk drugs from China.
One of the objectives of import liberalisation is also to give a boost to export production. And the traditional advance licence scheme has definitely helped to achieve a steady growth in pharmaceutical exports over the years. But, an undesirable fall out of the advance licence scheme is its growing misuse by a number of exporters. As per the EXIM policy provisions, EOUs and units in EPZs can import bulk drugs duty free for export production and are allowed to sell 50 percent of their production in the domestic market. It has been noticed that some manufacturer exporters within the Export Processing Zones and outside have been regularly diverting certain bulk drugs imported duty free to sell in the open market. What they do is just micronising or compacting these bulk drugs, repacking and selling in the market as drugs manufactured by them. Some of these drugs are rifampicin, penicillin G, Vitamin C, metronidazole and caffeine. Two of these drugs are in the negative list and in case of others, government had already imposed anti-dumping duties. Clearly this is a violation of the EXIM policy provisions causing revenue loss to the government. The affected domestic units have been complaining about the misuse of the provisions to the commerce ministry and the Central Board of Excise & Customs for last several months. The matter has also been brought to the notice of the Central authorities by the IDMA, OPPI and lately by CHEMEXCIL. It is surprising that the government is extremely slow to act against these culprits despite huge loss in revenue to the exchequer.