Since the excise duty exemption given to pharma sector in Himachal Pradesh is set to expire in 2020, several of the companies migrated to Baddi from Tamil Nadu are shifting their base to Sikkim with an expectation that the industry can avail same benefits for the next ten years there.
In addition to those moving from Baddi, many small scale pharma units from Tamil Nadu and Pondicherry are also looking for space in the north eastern state.
According to J Jayaseelan, chairman of the Tamil Nadu chapter of Indian Drugs Manufacturers Association (TN IDMA), 40 manufacturers from the state have started the work of setting up manufacturing facilities in Sikkim, and a few in Assam. He said companies from Tamil Nadu which are now operating in Baddi in HP, including a subsidiary of his Delvin Pharma, will shift their base to Sikkim where excise break covers the entire part rather than special economic zones (SPZ) in HP and Uttarakhand.
B Prem Kumar, managing director of Verax Life Sciences in Baddi and hailing from Tamil Nadu, said he is now engaged in the process of shifting his unit to Sikkim. According to him, the government of Sikkim provides all infrastructure facilities for the migrant industrial units and giving continuous support for bringing up the plant and other facilities. He said in another two years’ time, Sikkim will become self-sufficient in drugs manufacturing for the state’s complete requirement and also for the need of the entire north-eastern states. Sikkim will become the hub of pharma in the north-east. Several MNCs have already established their plants in Sikkim.
Speaking to Pharmabiz from Baddi, he said the Sikkim government is taking so many initiatives to focus on developing new technologies in the areas of pharma production and healthcare. The manufacturer hopes that the special packages given by the central government for the north-eastern states, and the industrial and investment promotion policy there will become beneficial for pharma sector.
To a question, he pointed out that due to several reasons, more than 25 companies migrated earlier to Baddi from Tamil Nadu have now closed their operations. Out of this, some units have found place in the north-eastern state. Remaining units have gone back to Tamil Nadu. All units come under SME sector.
Finding space for anxiety in future when the central government introduces GST, Prem Kumar said, “We are investing huge amount in Sikkim availing bank loans. But don’t know what will happen if the GST is implemented. Whether the state government can provide duty exemption for another ten years or not, is a question. If it is implemented, everywhere the prices will be the same. The most sufferers are the small scale entrepreneurs”.
He said even though the government provides all support in Sikkim, the industry encounters two major problems, language and labour. As per contract, 70 per cent of the total number of employees should be recruited from Sikkim. But it is too difficult for the industry to select suitable and efficient employees there. In Assam, the major problem is bad climate. However, a few manufacturers from Pondicherry and also from Tamil Nadu have taken land on lease and started work for setting up units in Sikkim.