As the recently imposed excise restrictions started taking toll on the small scale industries in Jammu and Kashmir as a whole, the small and medium pharmaceutical companies have demanded a Himachal Pradesh like package in J&K to stay put in the competition.
The small pharma players, feeling the maximum heat of the Finance minister's move, have taken the help of Jammu Kashmir Chambers of Commerce and other bigger associations like Confederation of Indian Pharmaceutical Industries (CIPI) to take up the matter with the Centre. Hit by the new restrictions, they are demanding excise-free package as existing in states like Himachal Pradesh and Uttaranchal. The move is likely to affect not just the existing units, but also the future growth of the area, which has been attracting large number of pharma units in the recent years, according to the industry.
Recently, the finance ministry had amended the incentive package to J&K restricting the excise refund benefits only on value addition which in practical terms means withdrawal of excise benefits to the industry as the value addition in the industry is just 5-10 per cent.
Chamber of Commerce sources said that the move had an across-the-board impact on the industry and already over 50 units in different sectors had been closed, being unable to imbibe the burden. The chamber has already led delegations to the Prime Minister and the Finance Minister to correct the imbalance, albeit with little effect.
However, S K Jain of Jammu and Kashmir Small Scale Drug Manufacturers Association said that the pharma units, especially the small players surviving on contract manufacturing, were among the worst-hit due to the cut in benefits.
"The big pharma players want to have their own manufacturing facilities to take the advantage of the situation and restrict their loss, instead of passing on the excise relief to the third party manufacturers. We don't want this refund scheme now. We will better go for no-refund, no-excise regime as in Himachal. The lesser MRP of drugs compared those manufactured in other parts of the State is also going to eat away the remaining benefits now as the refunds would now be paltry,'' he said.
Keeping in view of the withdrawal of benefits being provided by the Central Government from 2002 for the economic development of Jammu and Kashmir, none of the units in the state would be able to compete with units outside the state, Chamber sources said, adding that it would jeopardize the entire process of industrial development as that would affect the investment and employment generation in the state.
Many of the local industrialists have established their new industry and many of old units have gone into substantial expansion to avail the benefits of previous notification wherein central excise duty was refundable. The industry body alleged that the package of the incentives which had been granted for 10 years and was changed after the lapse of five and half years only cast aspersions on the credibility of the Centre.