The Punjab Drug Manufacturers Association has sought immediate intervention of Prime Minister Dr Manmohan Singh on the vexed issue of increasing the abatement rate to the small-scale pharmaceutical manufacturers by implementing the Dr Rangarajan Committee report, which had recommended 60 per cent abatement rate to the pharma SSIs in the country.
In a letter dated April 12, the Punjab Drug Manufacturers Association (PDMA) president Jagdeep Singh urged the Prime Minister to implement Dr Rangarajan Committee report which had recommended increase in the abatement rate to 60 per cent to small scale pharma industries against the present 42.5 per cent fixed by the Union Finance Ministry triggering widespread discontentment and anguish among the small pharma companies in the country.
"When AD (Union Chemicals Ministry) asked for 80 per cent abatement for SSI, it was rejected. Dr Pronab Sen recommendations were also rejected. Such is the fervour to wipe out SSI that even PM's accepted Dr Rangarajan recommendations increasing abatement to meagre 60 per cent for SSI are sought to be annulled. We urge the PM to assert and get Dr Rangarajan recommendations implemented in the national interest," the PDMA letter read.
Claiming that the twin purpose (for imposing the MRP-based excise duty by the Central government in 2005) of checking evasion in excise duty and to bring down the trade margins has been defeated, the PDMA said the government records prove that the revenue from the excise duty from the pharma companies has come down considerably ever since duty exemption was given to pharma companies in some states like Himachal Pradesh.
To substantiate its point that the government is losing revenue from the pharma companies, the PDMA letter said, "And instead of protecting revenue, decline is noticeable in 2006-07 as per figures available under RTI-copy attached. Expected revenue loss in 2007-08 is Rs 1000 crore on this account, something we have desperately tried to explain."
The PDMA letter also said, that the trade margins, instead of decreasing, in fact have also increased during this period. As there is no excise duty in the excise-free zones, the companies in these zones have increased the MRP rate to favour the traders resulting rise in prices of over 60 per cent of the medicines in the country. Over 60 per cent of the pharma industry has either gone to these excise-free areas or source their medicines from there. "The common man suffers from high prices as traders (to maximize profits) prefer goods from exempt states, which are cheaper being excise free, but bear higher MRPs," the letter said.