Union Budget 2006-07 has come in as a rude shock for the pharmaceutical sector in the state. There is no support or incentive for the sector for the pharma sector, said the members of the Karnataka Drugs and Pharmaceutical Manufacturers Association, (KDPMA).

According to Jatish N Seth, secretary, KDPMA and director Srushti Pharmaceuticals, absence of the proposal bringing down the excise duty on drugs to 8 percent from the current 16 percent will have a serious negative impact on the sector. The fall of FBT rate from 20 percent to 5 percent on travel will have a minor impact on the sector.

With the Union Budget offering nothing for the pharmaceutical sector is a big setback, stated Shailesh Siroya, managing director, Bal Pharma. The finance minister should have made efforts to at least bring in a level playing field addressing the issue of excise duty. With absolutely no efforts on this front, there will be a big rush to the excise free zones of Baddi, Uttaranchal and Jammu & Kashmir. It will mean an expensive proposition in terms of flight of capital both human and financial, stated Siroya. For the last that budget three months, there was a lull on the movement to excise free zones. A reconsideration was made on excise free zone operations only because companies were hopeful and confident that the Budget 2006 would bring about some positive trends on the issue, he added.

According to Suresh Khanna, pharma consultant former executive director of Kemwell and President API, Micro Labs the budget will have no impact on pharma sector.

"The Union Finance Minster has not uttered a word about the pharmaceutical sector and hence it is bleak future for the small-scale sector. The small-scale pharma units are already in bad state of affairs and with the Budget 2006, we have an uncertain future before us," M Chandrashekar, proprietor, CeChem Pharmaceuticals said.