Though the cut in excise duty from 16 to 8 per cent has come as a relief to the small and medium pharma enterprises (SME) in the North India, especially the hilly states of Himachal Pradesh and Uttarakhand, the price hike from the pharma companies in the tax exempted states has come as a bane for the companies outside the tax havens, adding to their survival for existence, said, Jagdeep Singh, president, Punjab Drug Manufacturers Association (PDMA) and secretary general of SME Pharma Industries Confederation (SPIC).
In an exclusive interview to Pharmabiz, he said that the small and medium industry is undergoing hard times owing to tax disparities vis-à-vis excise zones. "Besides, given the raw material fluctuation and general inflation, which does not allow a patient to buy all medicines in a prescription, the industry is getting a real beating," he added.
Asked whether the recent correction in excise duty has helped the units outside the excise-free zones, he quipped that the cut in the excise duty has only helped the SME sector outside the excise-free zones (EFZ) very marginally. "Because, the units in EFZ have hiked maximum retail prices (MRPs) to regain their relative advantage marginalised by excise reduction in budget. This has again placed the units outside the zones on a losing ground," he informed.
He also pointed out that at present there is no migration of pharma companies to the tax exempted state, since the goods and services tax (GST) is expected to be levied in budget 2010. With this development, the migration of pharmaceutical companies to the tax exempted states is not advisable currently, he said.
Revealing that associations have played a major role in helping the industries to fight to remove the anomalies, Jagdeep Singh said: "Reduction in excise was the result of associations' fight with the government for justice. But, low abatement of 35.5 per cent effectively truncates the small scale industry (SSI) exemption limit to less than half. The voice of the SSIs is not heard well in the finance ministry. Besides, the chemicals and fertilisers minister failed to get Dr Pronab Sen recommendations implemented and even the intervention of Prime Ministerial failed to get EAC recommendations implemented. That explains well our contention."
When asked about the state of affairs in Punjab, he said that the companies are "struggling for survival." "Select units will continue to operate and fight injustices against the SSI," he stressed.
Explaining how are the monopoly, consolidation and lobbying tactics by big pharma firms affecting the small scale people, he said, "Schedule M and EFZ package followed by MRP excise was part of a design to eliminate SSIs at the behest of large industry. To substantiate it, we may point out that MRP excise was levied to increase revenue and act as deterrent on higher MRPs printed on labels by companies. Revenue figures and NIPER report have proved that the policy is contrary to the objectives. Yet it continues even when the consumer suffers. Many large units had positioned themselves in EFZ well before the levy of MRP excise."
"Big fish is trying to swallow small fish. But small fish is fighting. And the Indian bureaucrat is not tilting towards large industry. There are a lot of good people in the government who ensure that average Indian does not loose hope. Anyway, time will tell what happens," he added.