The pharma industry associations in the country have come down heavily on the Union Budget presented in Parliament today by Finance Minister P Chidambaram. Terming the budget as "big disappointment', the associations said, that there is nothing substantial in the budget to boost the pharma industry.

Terming the budget as a big disappointment, Indian Pharmaceutical Alliance (IPA) secretary general DG Shah said, the weighted reduction on R&D should have been raised to 200 per cent and extended to 10 years. Besides, expenses on patent filing overseas, clinical trials abroad and dedicated land and building should have been included for weighted reduction.

Reacting to the budget, Organisation of Pharmaceutical Producers of India (OPPI) director general Dr Ajit V Dangi said, the Finance Minister once again missed the golden opportunity to spur the growth of the knowledge-based pharmaceutical industry. Against our expectations to reduce the excise duty from 16 to 8 per cent, the Finance Minister did not do this in spite of the recommendation from the Chemicals Ministry. Customs duty on all life-saving medicines presently classified under list 3 should have been reduced to zero per cent from 5 per cent.

However, the 21.9 per cent increase in healthcare budget to Rs 15291 crore is a welcome move. The reduction in peak import duty from 12.5 per cent to 10 per cent is also a step in the right direction, though it is below ASEAN level. We are glad that the tax exemption for R&D is extended for another 5 years to 2012. Given the long gestation period for discovery research, 10 years exemption would have been more appropriate.

"Overall, from the perspective of pharmaceutical industry the Union Budget 2007-2008 falls short of our expectations. On a scale of 0 to 10, we would rate it at 4.5", Dr Dangi said.

Terming the Budget as a big let down, IDMA secretary general Daara Patel said despite several representations from pharma associations and recommendations from Chemicals and Fertilisers Minister, the Finance Minister did not reduce the excise duty. "There is nothing substantial for the pharma sector in this budget. This is for the second year in a row that the Finance Minister is neglecting the pharma sector", he said.

Though the Finance Minister has reduced the central sales tax from 4 per cent to 3 per cent, there is no proper roadmap for further reduction in future. The exemption for SSI up to Rs 1.5 crore against the demand of Rs 5 crore is another big let down. Against the industry's demand to extend the tax incentives for R&D for 10 years, the Finance Minister had extended it to just 5 years.

However, the saving ground is the reduction in customs duty on chemical goods and reduction of duty from 7.5 per cent to 5 per cent for R&D machines, Patel said.

Describing the budget as big disappointment, Confederation of Indian Pharmaceutical Industries (CIPI) chairman TS Jaishankar said, the Finance Minister should have provided a level playing filed by reducing the excise duty from 16 to 8 per cent. We have made several representations to the Prime Minister also in this regard. There are more than 5000 companies outside the excise-free zone, their survival is in danger now without any government concessions, he said.

Our demand for limiting the tax benefits in the excise-free zones to those units, which are manufacturing for their own products has not been heeded by the Finance Minister. The big companies are happy, but small companies have been left in the lurch by the Finance Minister. "There is a hand of MNCs" in this, Jaishankar said.