Karnataka Drugs and Pharmaceutical Manufacturers Association views the budget as a lackadaisical document with no tax benefits for micro small and medium enterprises (MSMEs) which forms the bulk of the 19,000 Indian pharma companies. In Karnataka too, out of the 236 pharmaceutical companies 93 per cent are in the MSME space.
According to Jatish N Sheth, president, KDPMA and director, Srushti Pharmaceuticals P Ltd, the finance minister Arun Jaitley has presented a conservative budget which is seen as a cautious move. The effort to provide investment allowance at 15per cent for 3 years to a manufacturing company which invests more than Rs. 25 crore in plant and machinery will not benefit the micro small and medium enterprises.
However, what was most wanted at this point of time for the pharma industry was the transition towards Goods and Services Tax (GST), he said. GST is a critical component for the pharma industry and the industry will need to wait a while for this much awaited announcement, he added.
However, we do appreciate the Union government’s commitment to revive the Special Economic Zones (SEZs) and make them effective instruments of industrial production, economic growth, export promotion and employment generation. This will attract pharma investments which has been abysmal for several years particularly in Karnataka .
There have been some efforts to encourage availability of start-up capital by way of equity to be brought in by the promoters. The proposal to establish a Rs. 10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies is good. The move to establish technology centre network to promote innovation, entrepreneurship with a corpus of Rs. 200 crore is a laudable move, said the KDPMA president.
On the announcement of an entrepreneur-friendly legal bankruptcy framework developed for SMEs to enable easy exit, he said that this too could be appreciated.
The nationwide ‘District level Incubation and Accelerator Programme’ taken up for incubation of new ideas and providing necessary support for accelerating entrepreneurship would help to see growth of more start-ups, said Sheth.