The last two years saw pharma companies, who traditionally preferred to locate their new plants in western and southern India, setting their sights on north Indian states, specifically, Himachal Pradesh and Uttaranchal to locate their new R&D centres and formulations units. Some of the drug majors even shifted their existing units form south to these two states.

The special incentive scheme announced by the Union government in January 2003 for new investment projects set up in Himachal Pradesh and Uttaranchal helped these two hilly states to corner a sizeable portion of the new investment proposals announced in the last two years.

According to the projects investment survey conducted by ProjectsToday as of December 2005, there were 188 pharma projects in India. Of which, 64 projects were located in northern India.

Among the northern states, Himachal and Uttaranchal together cornered around two-third of the total investment proposed.

Though Himachal & Uttaranchal offered similar incentives to new investors, the initial advantage went to Himachal Pradesh, as the state not only was able to provide cheap and adequate power and water needed by the pharma units but its government machinery also showed its eagerness in clearing project proposals within a month or two.

As of December 2005, Himachal Pradesh had 25 projects at various stages of implementation. Almost all projects are located at Baddi in Solan district. Among the prominent investors were Nicholas Piramal, Dr. Reddy's Lab, Venus Remedies, Morepen, etc.

Not to be left behind, the Uttaranchal government on its part took some quick initiatives and set up a most modern pharma city in Selaqui Industrial Area, Dehradun. As per the latest information available the state government has signed around 37 MoU worth Rs.175 crore for setting up pharma units.

Maharishi Ayurveda Products, Shreya Life, Sharon Bio, Coral Lab and Natco Lab are some of the prominent pharma companies lined up projects in Uttaranchal.

Though the recent talk of the possibilities of the Union government reducing the central excise duty on pharma industry from 16 per cent to 8 per cent is expected to dim the attractiveness of these two states in attracting further investment in this sector, nevertheless the other advantage these states provide in the form of industrial infrastructure would help them to continue to attract sizeable investments atleast from pharma majors.

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