In a pre-budget exercise to derive maximum benefit for the pharmaceutical industry in the country, the Indian Drug Manufacturers Association (IDMA) has appealed to the Union Finance Ministry to cut down excise duty on pharma products from the existing 16 per cent to 8 per cent.
Apart from IDMA, several other pharma organisations including the CIPI have also urged the Union government to reduce the excise duty on pharma products. The demand for excise duty cut comes at a time when a large number of pharmaceutical industries in various states are shifting their units to excise-free zones in Himachal Pradesh, J&K and Uttaranchal. Though the pharma industry has been clamouring for excise duty reduction for the last some years, it fell on the deaf years of the central government forcing pharma industries to shift their units to such areas where tax holiday is in force.
But, the ones who have been hit hard by the high excise duty is the small-scale industries which are finding it difficult to move to the excise-free zones due to the huge expenses involved in shifting their units.
"This issue has been voiced for the past many years now, but the Finance Ministry is turning a blind year to our pleas. Even the chemicals and fertilizers ministry had forwarded a similar appeal prior to last budget, but to no avail. If such a scenario continues, many more pharma companies will move to the excise-free zones and the states will be devoid of companies," said S V Veerramani, chairman of Small and Medium Enterprises Committee, IDMA.
He said the government will suffer huge loss in revenues if a large number of companies move to the excise-free zones from the respective states. When these facts were brought to the notice of the government, the government has asked the organisations to prove.
"The government is not seized of the issue. They will only come to understand the crux of the issue when the companies start functioning in the excise-free zone in a full-fledged manner. And even if the government reduces the excise duty, it would be no use," said Veerramani.
Speaking about the Union government's proposal to initiate the centralized drug authority, Veerramani said that such a move would only cause delays in issuing licenses to the companies, as there would not be enough manpower to look into the issue. Moreover, small-scale companies would not find it comfortable monetarily to travel all the way to Delhi. "As of now, we have to go to Delhi to register new drugs and after that we can approach the State Drug Control office. But if we have to go to Delhi every time even for small issues, then it will have a negative impact on the SSI's," he stated.
Moreover, as the networking between the Central and State Drug Control offices is good, the setting up of a CDA was not essential. "Now the Centre can know which drugs are being approved by the State and other issues. So there is no need for a CDA. The current body itself is good as we can approach them easily for day to day affairs too," he said.