Giving a big sigh of relief to the pharma industry, especially the small and medium sectors, Union finance minister Pranab Mukherjee has left it unharmed while raising the excise duty on the most of the sectors from 4 per cent to 8 per cent, in his budget presented in the Parliament on Monday.

True to the apprehensions of the industry as a whole, the finance minister rolled back the blanket cut in excise duty from 8 per cent to 4 per cent announced as part of a stimulus package some months back. However, he spared the pharma industry from harsh step, while presenting his general budget which could enthuse many.

"With the government's proclaimed objective of introducing a Goods and Services Tax (GST) both at the national and State level, some more steps in that direction are necessary. One measure that would facilitate the process is the further convergence of central excise duty rates to a mean rate - currently 8 per cent. I have reviewed the list of items currently attracting the rate of 4 per cent, the only rate below the mean rate. There is a case for enhancing the rate on many items appearing in this list to 8 per cent, which I propose to do, with the following major exceptions," he said, while including drugs and pharmaceuticals and medical equipment among exempted categories.

"The basic customs duty on influenza vaccine and nine specified life saving drugs used for the treatment of breast cancer, hepatitis-B, rheumatic arthiritis etc. on the bulk drugs used for the manufacture of such drugs, has been reduced from 10 per cent to 5 per cents. They will also be totally exempt from excise duty and countervailing duty," according to the budget proposal.

In another relief to the medical devices industry, the customs duty will also be reduced from 7.5 per cent to 5 per cent on two specified life-saving devises used in treatment of heart conditions. These devises will be fully exempt from excise duty and CVD also.

Besides, along with the other small scale units, the pharma sector also will benefit from the budget proposal for boosting the bank loans for them. Besides, in a relief to the SME sector, the existing special incentive upto two per cent for exports will continue further.

Though the industry was looking for further increase in the weighted deduction for R & D in the pharma sector from the current 150 per cent, it did not come through though the finance minister extended the benefit to more areas. The budget has allocated Rs 155.25 crore for the pharmaceutical department.