The small-scale drug manufacturers are in dilemma and are divided whether to support the move of the Ministry of Small Scale Industries to increase the investment limit for SSI pharmaceutical units from the current level of Rs 1 crore. The SSIs fear that with such a change they may lose some major benefits enjoyed by them.
It is learnt that even the Confederation of Indian Pharmaceutical Industries (CIPI) which has been pressing to increase the limit to Rs 3 crore for some time, is not sure now whether to support the initiative as many members of CIPI are not very keen.
When contacted, T S Jaishankar, Chairman of CIPI said many members of the organization feel the move is likely to do more harm than helping the 'real SSIs'. Hence, CIPI is yet to decide on the stand it should take at the meeting convened by the SSI ministry in Delhi, this week.
Sources point out that at present the SSIs enjoy benefits like excise duty exemption for staying within the Rs 1 crore mark and this is a major factor for many drug makers assigning job works to reduce their manufacturing costs. Further, SSIs within Rs 1 crore limit have preference in drug purchase for tenders of most of the state Government drug procuring agencies, a strategy of the states to promote local SSIs. Besides, many states offer the SSIs EMD exemption in drug purchase tender process. Since majority of the SSIs are dependent alone on the government orders, it is a matter of concern whether the increase in investment limit will help them continue to enjoy the benefits.
A section of the SSIs point out that as represented by IDMA to the government, increase in limit is not much of significance with the modernization process related to the deadline of Schedule M and GMP compliance. Definition of SSIs -investment within Rs 1 crore on plant and machinery in setting up a manufacturing unit and upgradation of units with instruments like air handling system or adhering to SOPs -cannot be seen as part of the 'investment in plant and machinery,' they argue.
Further, they point out that the real SSIs are fighting for their survival with the incentives from the government and are mainly dependent on the tender supplies. They are not in a position to be ambitious on exports and cornering global orders when the WTO regime comes into force by 2005, countering another major point raised by IDMA SSI committee for increasing the limit.
Sources aver the move is likely to benefit only the units that have already stabilized and is in the process of growing further to a larger company. Hence it could be suicidal on the part of the majority real SSIs or small players to support the move of the government to increase the limit, feel a section of SSI units.