The Association of Biotechnology Led Entrepreneurs (ABLE), in its pre Budget 2006 recommendations to the Finance Ministry, Ministry of Science and Technology and the Department of Biotechnology, has urged to look into 16 points.

While five out of the 16 recommendations were related to tax issues which were affecting the sector, the remaining 11 are relating to SEZ, biotech Parks and funding. According to ABLE, the Union Government must seriously consider the duty exemption norms for imported life saving drugs and diagnostics components for indigenous manufacture. It must make serious efforts to exempt customs import duty on R&D equipment and duty refund/drawback for R&D consumables. In addition, it should also address the exclusion of withholding tax for technology transfer and technology licensing in biotechnology, weighted average tax deduction on R&D expenditure & inclusion of international patent filing costs u/s 35 (2ab) and excise duty on diagnostic kits for HIV antibodies.

Dr. Kiran Mazumdar Shaw, president , ABLE and Nitin Deshmukh -Head - Private Kotak Mahindra Bank and Director , ABLE stated, issues of tax, financial assistance and infrastructure with further like SEZs and State Biotech Parks would offer the sector the required relief and help it to grow further.

The Association has pointed out the serious anomaly in the category of Life Saving Drugs and diagnostics wherein raw materials and components are levied customs and excise duty whereas the finished products are import duty free which is detrimental to indigenous manufacturing and is encouraging trade. Furthermore, it puts indigenous manufacturers at a disadvantage to MNC competition.

The Biotechnology sector being capital intensive, there is a need for reduction of R&D capital cost and called for increase the list of items under R&D equipment specified in List 27 A and List 28 of the Custom Notification No: 26/2003 dated 01.03.2003 by DSIR recognized Research Laboratories.

In the wake of the challenges imposed by the WTO-TRIPS regime, ABLE has recommended that the weighted deduction be increased to 200% and the scheme be extended for a further period of 8 years up to March 31, 2015. Other exemptions included Withholding Tax for a period up to 2010 and exclude diagnostic kits used for detection of HIV Antibodies from excise duty.

In a bid to give a boost to the biotechnology infrastructure in the country, ABLE has asked for relaxation of export obligation norms for biotech parks availing of SEZ status and for companies located in state sponsored Biotech Parks to avail of Duty free import of equipment, instruments and consumables and Tax holiday under Section 10A/ 10B of the Income Tax Act.

Another issue that required to be dealt was that of the minimum requirement for setting up a biotech SEZ which is restricted to 25 acres of land or 1 million sq. ft of building area, similar to the norms specified for the IT Industry.

Further, ABLE has also suggested a 2-year moratorium on obtaining price approval for products under price control, restrict the limit of turnover for small scale units (SSIs) and waive requirement of filing form er-5 & er-6 under cenvat credit rules 2004.

Under funding recommendations, ABLE has asked for a possible provision of a central fund amounting to Rs 200 crore to compensate states that provide subsidy, specifically to approved transgenic seeds.

Delving into the problem of seeking financial assistance, ABLE has recommended for 'priority sector lending' for biotechnology, similar to what exists in Agri-business sector where agri-biotech has benefited. It also proposed that Rs 200 crore of funds under the Technology Development Board be earmarked for providing Long Term Funds to Biotech Companies.

Among the other financial assistance sought for the biotech sector are budgetary allocation for state supported biotech parks, budgetary allocation for setting up arbitration council or quasi judicial tribunals to address IPR disputes and for setting up a world class internationally accepted accreditation agency.