The pharma export has witnessed a negative growth in the last few months and one of the reasons for the negative growth is the problem faced by the exporters related to the release of payment. To address the issue, the Pharmaceuticals Export Promotion Council of India (Pharmexcil) is of the view that the Indian government should also adopt the Iran model, where the government chose UCO Bank to process the payment for export and import.
In 2012-13 sanctions on Iran by US and European states, India and Iran had an arrangement to have payment for export and import between both the nations in INR mediated through UCO Bank Kolkata.
Dr P V Appaji, director general of Pharmexcil says, “Many of the exporters has stopped taking orders due to the issues related to the release of payment by the importing countries. In Sweden also we are facing the same problem although the RBI has clarified to Pharmexcil that US sanction on Sweden is not applied to pharmaceuticals, so the Indian bank should not have any problem in accepting the payment but the Banks are not accepting the Letter of Credit (LC) from the exporters due to the currency fluctuation.”
If the government adopts the Iran's model to process the payment where the foreign currency is not involved and the exporters and buyers are involved directly to release the payment, may be this can further boost the pharma exports, said Appaji.
The council is constantly in talk with the commerce ministry over the issues related to the negative growth of pharma exports in the first quarter. The council will also have a review meeting soon with the industry and the commerce ministry to discuss the issues impacting the negative growth.
Appaji says, “Fluctuation in currency, country focused policy, regional trade agreement etc are contributing to the negative growth. It is difficult to come up with the instant solution as the government is aware of the problem and we have 3 to 4 ministries involved to take any decision.”
The Indian pharma export has witnessed 6 to 7 per cent negative growth in Europe and US market in last three months. A decline in pharma export particularly to the US, Russia and Africa in the last three months has been noticed due to the fluctuation in the exchange rate. In European market the decline in pharma export was due to the issues related to written confirmation certificate but the Council has addressed the issue with the help of DCGI.