It is a curse for the small and medium scale pharmaceutical industries in India that they remain neglected even though they provide quality medicines at competitive prices for the domestic and international markets. One reason for the neglect is the false propagation of a concept that medicines at lower prices cannot be of good quality. This misconception is created by MNCs by planting certain distorted reports in the media, said Nipun Jain, chairman of SME panel, Pharmexcil.
While speaking in a seminar organised by Pharmexcil and IDMA Tamil Nadu branch, he said the public sector banks are refusing loans to SMEs on the ground of ‘high risk category of the country and volatile international situation'. “PSU banks agree to give export credit to SMEs only if they provide extra collateral security. Further these banks are harassing the units by delaying proposals of export finance and making fictitious barriers. This forces them to export their products with the help of MNCs or international trading houses which make the exports costly and uncompetitive,” he said to the exporters and managers of SMEs in Tamil Nadu.
He said Pharmexcil has requested the Ministry of Commerce to call a joint meeting of officials of RBI, Banking Secretary and PSU banks to address certain issues faced by the pharma exporters. No unit is licensed to manufacture drugs and medicines without establishing GMP compliance. Indian GMP standards are more stringent when compared to developed countries. Even then a false report is disseminated by certain media supporting MNCs that India is a source of 40 per cent spurious medicines in the world.
According to him there are 10563 licensed drug manufacturers in India and the combined strength of SME pharma sector is 9456 units. The total production of drugs in the country comes around Rs.85,000 crore, and the production share of SME is 87 per cent. The market values assessed is 40 per cent. India is exporting pharma products worth US$ 8 billion every year which is depending on the right synchronization of the various departments of Govt of India. The ministry of commerce is promoting exports of drugs to countries like Africa and Latin America with a financial stimulus of 3 per cent from the finance ministry.
Regarding government’s intervention to the refusal of refinancing of Line of Credit by PSU banks, Nipun said government should reserve 50 per cent of the L/C of every country for SME exporters. He reminded the audience that earlier the finance minister of India had informed the parliament that no export refinancing would be denied and any such case was faced by any unit, it must be brought to the chief executive of the bank. The minister had added that strict instructions were given to the banks to become liberal and helpful towards the SMEs in providing export credit.
He wanted the Govt of India to remove the policy difference with regard to refinancing of export credit and the SMEs should be helped to export their products to all the developing countries identified by the government. If so, they can grow to the full potential of 30 per cent annually.