Pharmexcil taken some major initiatives to help the Karnataka pharmaceutical industry to maximise their export efforts. Some of these are enabling the exporters to obtain license without delay, helping them to get balance of CENVAT credit and supporting Small and Medium Enterprises (SMEs) with guidance on access to easy finance.
At a Pharmexcil seminar-cum-interactive-session on export promotion, representatives of the Karnataka Drugs and Pharmaceutical Manufacturers Association (KDPMA) came forward to provide details of the serious hurdles that are restricting their efforts while marketing their products overseas.
To begin with, the export office of Central Drugs Standard Control Organization (CDSCO) set up in Karnataka in 2009 at the Bengaluru International Airport did not handle imports and pharma manufacturers were forced to approach Chennai port for the same. The latest position is that the CDSCO office at BIAL for imports has been notified in the gazette and the Drugs Technical Advisory Board (DTAB) would be issuing a formal order soon.
Some of the other key issues are inordinate delay in getting export licenses, incongruity on balance of CENVAT Credit Rules 2004 and the inability to import technical grade nitric acid, glucosamine among other pharma chemicals and intermediates affecting the exporters. In addition, the exporters also sought further reduction on the duty of final product from the current 5 percent to one percent.
The industry was given the assurance by the panel represented by JP Gregory, chief commissioner, Central Excise and Customs, Bangalore to look into the problems.
As many of these issues are being tackled by the Union government, there was little scope for either the officials from Director General of Foreign Trade (DGFT) represented by its joint director JV Patil or the chief commissioner, Central Excise and Customs, Bangalore to handle at their levels.
According to Abhay Kumar, Sinha, assistant Regional Director, Pharmexcil, the government’s Market Development Assistance (MDA) and Market Development Initiative(MDI) schemes would assist the SMEs to promote exports and explore new markets.
Addressing the paucity of finance for SMEs, Nipun Jain, chairman SME panel, Pharmexcil and managing director, Pharmchem said that the public sector banks are refusing refinancing for exports based on Letter of Credit and Export Credit Guarantee Corporation (ECGC) Documents against Acceptance (DA) because of the volatile international currency situation.
In order to overcome export anomalies, public sector banks agreed to give export credit to SMEs only if they provide extra collateral security or else their proposals for export finance are delayed. This leaves the small and medium units to approach multinational companies or International Trading Houses which makes it only costly and uncompetitive. Therefore banks need to look into financing of small and medium sector and provide the collateral security that will provide them the adequate support, stated Jain.