The small scale pharmaceutical manufacturers, with the support of drug traders and a section of the industry, may soon resort to a one-day strike as a mark of protest, if the Union Finance Ministry fails to keep in abeyance with immediate effect the notification to assess excise duty based on drug MRP.
Talking to Pharmabiz in Chennai, T S Jaishankar, chairman, Confederation of Indian Pharmaceutical Industries (CIPI) said the CIPI was planning a series of protest methods, if the Union Finance Minister fails to meet the industry delegation and also put the notification in abeyance with immediate effect.
"We have already got the support of traders led by AIOCD and a section of the pharmaceutical industry in this regard. If the minister fails to hear us, we will resort to a one-day strike as token protest, followed by various protest strategies for survival. We suspect this is part of a conscious plan to eliminate small scale manufacturers from business," said Jaishankar.
CIPI noted the notification came at a crucial time when the pharmaceutical industry is reeling under enormous pressures by the Patent Act ordinance, revised Schedule M notification and the Ministry of Chemical & Fertilizer's draft memorandum seeking further reduction in the prices of drugs. This arbitrary decision on the part of the finance ministry will have great implications and will result in total stoppage of production by the entire industry.
At present, the industry has to necessarily give a minimum of 20 per cent margin to the distributors. Over and above, there is a retail margin of 20 per cent, 10 per cent for stockists, 5 per cent for super stockists/C &F agents and 10 per cent for sampling. Hence at least 65 per cent abatement is absolutely essential and the industry cannot work on the abatement of 35 per cent on retail price.
"Surprisingly, even industries such as cosmetics, pan masala and other non-priority industries have been given 50 per cent abatement," noted CIPI.
In addition to this, there are several other issues, including increase of the current Excise Duty exemption of Rs 1 crore, price increase of drugs due to this notification, reducing the Excise Duty for drugs and medicines from 16 per cent to 8 per cent of Central Excise duty for pharmaceutical etc. The excise duty exemption in certain states of India which are detrimental for industries in other states and several other critical issues have to be considered while implementing the notification.
The CIPI has already sought an appointment with the Union Finance Minister P Chidambaram, to explain the problems in detail, informed CIPI chairman.