The Union Budget for 2006-'07 contain no proposal to give a boost to the pharmaceutical industry and by doing that the Finance Minister has neglected the entire pharmaceutical industry, feels the drug industry bodies in south.

The pharmaceutical industry, especially, the small and medium scale units, was expecting a reduction in excise duty and rising of exemption limit from Rs 1crore to Rs 3 crore in the budget. The industry bodies said that the finance minister has totally neglected all the pleas from drug industry and the recommendations made by Ministry of Chemicals and Fertilizers, Ministry of Small Scale Industries and Prime Minister's Taskforce.

"All our efforts for the last 10 months seems to be nullified, and we feel that the budget neglected the SSI units," said a source from Pharmaceutical Manufacturer's Association (PMA). He added that the budget has disregarded all the recommendations made by the SSI associations.

The reduction of excise duty from 16% to 8% was very important to small and medium scale drug manufacturers in the country, as most of these sector survived from the contract manufacturing jobs from major companies. The 16% duty made contract manufacturing unviable to the small and medium units and forcing them to move to excise free zones. This has made the matters very difficult for these units, informed S V Veeraamani, vice president of IDMA and chairman, IDMA-SME Committee.

He said that the exemption of sample products, sales promotion and other promotional expenditures from Fringe Benefit Tax would offer some relief to the industry. The proposal to reduce the peak customs duty from 15% to 12.5% could help to bring down import of some intermediates and ingredients.

"The budget proposals do not seem to be a growth oriented budget. It is a revenue oriented budget, in which the government is trying to gather revenue from booming industries," Veeramani told Pharmabiz.

The matter will be discussed in the executive meeting of Confederation of Indian Pharmaceutical Industries (CIPI), which will be held at Chennai on March 18 and 19. The IDMA will be making a representation to the Ministry of Chemicals and Fertilizers and Ministry of Small Scale Industries shortly, said Veeramani.