Karnataka’s pharmaceutical, biotechnology and healthcare sectors have expressed both relief and disappointment over the Union Budget 2013-14 announced by the Finance Minister P Chidambaram.
Some of the relief measures are no change in Minimum Alternate Tax (MAT), support to micro, small and medium enterprises (MSMEs) where refinancing capability of Small Industries Development Bank of India (SIDBI) has been increased from the current Rs.5,000 crore to Rs.10,000 crore annually and healthcare for economically backward under Rashtriya Swasthya Bima Yojana (RSBY).
The sectors have been unhappy as there is nothing specific in the budget to encourage the private health sector to build capacity with no incentives for medical device manufacturers and no effort to consider recommendations put forth by the Association of Biotechnology Led Enterprises (ABLE).
“The budget has really nothing specific to offer for the pharma industry. But the big relief is that there is no revision in excise and customs duty which could have hit the sector badly, pointed out SG Biligiri, president, Karnataka Drugs & Pharmaceutical Manufacturers Association (KDPMA) and technical director of Juggat Pharma.
There is no increase in MAT for sole proprietorships and partnership firms as it remains at 18.5 per cent. The encouragement to MSMEs is heartwarming. But the Finance Minister has not provided any export incentives at a time when the government is looking to decrease its current account deficit (CAD) of 5.4 per cent which is due to increased imports, said Jatish N Seth, vice chairman, Confederation of Indian Pharmaceutical Industry (CIPI), member, KDPMA and director, Srushti Pharmaceuticals.
“The FM's directional intent is good and the investment signals are positive. However, implementation and fiscal prudence still remain a concern. Bolder measures could have been taken to kick start growth as projected in the National Economic Survey. The manufacturing sector has not received the impetus it deserves and the 15 per cent investment allowance is inadequate. The Pharma sector has received scant attention. Overall a positive budget which may not deliver the intended six per cent growth, pointed out Kiran Mazumdar Shaw, CMD, Biocon.
From the healthcare sector, heads of hospitals unanimously appreciated the new National Health Mission that combines the rural mission and the proposed urban mission to receive Rs.21,239 crore which is an increase of 24.3 per cent last year.
According to Rajen Padukone, MD & CEO, Manipal Hospitals., though the Finance Minister indicated that health is a priority, the positives are: focus to cover a larger segment of the economically weaker segments with health cover through the RSBY and other schemes. This is clearly an indirect acknowledgement by the Government to move increasingly to take on the role of a Payer than a Provider. From a health industry perspective, the investment allowance for capital expenditure of Rs.100 crore plus, given that healthcare sector is capital intensive, is welcomed.
According to Dr N K Venkataramana, vice-chairman and chief neurosurgeon, BGS Global Hospitals, the budget is encouraging for healthcare going by the focus on national health mission to create uniform standards across the country and the attention to medical education and research. However, there should have been tax subsidies to import medical equipment. Instead of building six new institutions, there was need to upgrade existing institutions.
For the biotechnology industry, the budget is not path breaking and is not sending the right pointers for quick growth of this sector as there are no major incentives announced by the government. But a heartening measure is that the plan outlay for Science and Technology has increased and there are some announcements for the agriculture sector where two new Biotech Institutes are coming up, said Dr PM Murali, president, ABLE.
According to Dr GSK Velu, founder and MD of Trivitron Healthcare, the government has ignored the healthcare sector again. Medical device industry has not been given status similar to Infrastructure. There are no incentives for local innovation and manufacturing or higher tax exemption for annual health checks to achieve the ‘Health For All’ by 2020.