The Association of Biotechnology Led Enterprises (ABLE) has hailed the budgetary measures announced by Finance Minister P Chidambaram in the Union budget proposals for the year 2007-08 which, it said, will give the much needed support to sustain the growth momentum of the biotech industry in the country.
ABLE president KK Narayanan said, that the biotech industry is about US$ 1.5 billion and is expected to reach $5 billion by 2010 and $25 billion by 2015. Innovation would be the key to sustaining this momentum. "Measures such as the extension of the weighted average tax exemption on R&D investment, service tax exemption for technology business incubators and pass-on direct tax benefits to VCs investing in biotech and related technology sectors such as nanotechnology, seed research and development, drug discovery and discovery of NCEs (new chemical entities) will go a long way in providing the much needed support to innovation in this sector", he said.
ABLE had made a set of recommendations to the Finance Minister as part of the pre-budget exercise. One of the key demands was to remove clinical services and drug development research from the ambit of service tax levy. The service tax levy of 12.24 per cent was making clinical services uncompetitive in the global market, vis-à-vis other countries. "We are extremely happy that the Finance Minister has completely done away with service tax for clinical research services", Dr. Narayanan added.
However, there is a serious anomaly with respect to imported and indigenous life saving drugs and diagnostics. The raw materials and components used by indigenous manufacturers for such products are levied customs duty and excise duty whereas the finished products are allowed to be imported duty free. ABLE had recommended that components and raw materials used by indigenous manufacturers for the production of diagnostics and life saving drugs also be exempted from excise and custom duty. This issue still remains un-addressed.
The excise duty has been cut on life saving vaccines. There is also an increasing focus on HIV detection and control. Many companies in this country, who are our members and are also leading producers of these products, will stand to gain from these measures. Further, the fillip given to Biodiesel through excise duty and sales tax exemption as well as the recognition accorded and to renewable energy sources, is a step in the right direction, especially in a country with growing energy needs.
The budget has also provided a boost for bio-pharma manufacturing by way of duty reduction on specific equipment, including medical equipment.
Dr Kiran Mazumdar Shaw, CMD Biocon and ABLE executive council member said, "This year, the biotechnology sector has received the Finance Minister's attention. He has announced incentives for innovation and research, development and growth and manufacturing. By passing on tax benefits to VCs investing in biotech, he has created a positive entrepreneurial environment."