With Prime Minister Dr Manmohan Singh taking over the charge of Union finance ministry from P Chidambaram, the small scale pharma industry in the country is sensing an opportunity in the power shift. The sector has raked up several issues which have been hanging in balance due to Chidambaram's seemingly partial attitude towards large companies.
Industry sources said that there are many issues on which the Prime Minister had shown sympathy with the small scale industry and had in fact directed the finance ministry to take action accordingly. These issues include 60 per cent abatement to SSIs and increase in SSI exemption upto Rs 5 crore, sources said. But, due to Chidambaram's steadfast attitude, the directives remained in the cold storage of his ministry. But, now that the Prime Minister himself is in the saddle, the small scale industry expects him to deliver.
Bringing the issues to the notice of the Prime Minister once again, the SME Pharma Industries Confederation (SPIC) recently wrote a letter to the PM urging him to increase the abatement to 60 per cent. "The abatement committee/TRU has always maintained that abatement is equal to trade margins and taxes but pharma SSI has been deprived of it. When Abatement was 42%, the AD ministry sought abatement of 80% for SSI which was turned down. Instead of increasing it to 60% as per EAC recommendations duly approved by PM, it has been decreased to 35% in Budget 2008 when excise was decreased.
"This truncates SSI exemption limit to less than half as it is calculated on net assessed value. Pleadings with member excise, CBEC have not helped. Reason cited is that increase will cause inverted duty structure once a unit reaches SSI exemption limit of Rs 1.5 crore. Why its exemption limit is curtailed is not understood. Abatement norms should be followed to fix abatement which should be at least 60% as per EAC recommendations till exemption limit of a unit is exhausted," it said.
Stressing on the need to increase the SSI exemption limit, SPIC said that Dr Pronab Sen recommendations sought increase in Pharma SSI exemption to Rs 5 crore which was turned down on the grounds that it cannot be sector specific. If Schedule M can be sector specific, then exemption limit can also be sector specific. Pharma SSI should be provided exemption limit of Rs 5 crore to ensure more production moves under MRP excise to curtail prices and they can survive.
SPIC also demanded that SSIs operating under MRP excise and having turnover of below Rs 5 crore should be exempted from provisions of DPCO to encourage further production in this segment in consumer interest.
It also urged the Prime Minister to defer the Drugs Act Amendment Bill 2007 so that multinationals do not succeed in their design of eliminating SSI. Najma Heptullah Committee recommendations should form basis for relief to SSI from unreasonable portions of Schedule M. Funds should be provided to SSIs instead of providing worthless tax breaks to large industry.