Indian pharma sector is buoyant and growth is phenomenal. India's globalization in the pharma sector has been outstanding.
Then, where is the question of fear about the future of pharma industry ?
However, the situation with respect to small scale sector is contrary. The future looks bleak absolutely for SSI pharma sector. The very fact that SSI pharma industry is fighting tooth and nail with Health Ministry to dilute certain conditions of Schedule M and with Ministry of Finance to reduce excise duty itself indicates that there is a matter of great concern about the future of nearly 5000 companies with an investment of Rs 7000 crore and employing over one million people.
There are several predictions that the present 5000 companies will be reduced to less than 500 companies.
The meaning of SSI needs to be defined. Perhaps, a stage has come to redefine the SSI pharma sector as a tiny sector. This is probably because several medium scale industries are taking shelter under the banner of small scale industry. But, the present status, after the government having withdrawn several concessions to the industry, makes the situation redundant.
There is no doubt that Industry Ministry should be greatly concerned about rehabilitating the SSI pharma sector and should possibly be looking at ways and means for sustaining the segment. Government cannot ignore the fact that SSI pharma sector would play a vital role for achieving India's goal of providing medicines to common man at affordable prices.
There are several measures that the government can take to encourage SSIs without compromising on quality. The recommendations of the Prime Minister's Task Force Committee for reducing excise duty on drugs and medicines would be an important factor in saving small scale sector from disaster and at the same time, would provide drugs at affordable prices to the public. It is strange that in spite of clear recommendations of the above committee, the Finance Ministry has not openly announced its decision to reduce the duty.
It is possible that the government will announce as a part of the budget scheduled for February 2006. It is impractical to recommend to SSI sector to look at several other opportunities within the pharma industry such as contract manufacturing, clinical research services and other avenues of services within the industry in view of the fact that small scale sector is always strived to focus on formulation manufacturing. They do not have the expertise nor the financial muscle to totally change their business module overnight.
The efforts of the SSI sector to dilute certain factors of Schedule M have always been misunderstood as they are expecting concessions on quality.
While there are, no doubt, opportunities on the export front, there is equally a big opportunity in India for SSI sector.
Government's announcement of the Technology Upgradation Fund is laudable but, it does not seem to have found favours as the conditions for availing such funds seem to be unworkable.
In all respects, the fate of SSI sector would be defined clearly in the Budget-2006 only unless the government announces its decision on reduction in excise duty without waiting for the Budget.
In the meantime, SSIs wait with their fingers crossed.
- (The author is chairman, CIPI.)