The drug manufacturers engaged in setting up of new GMP complaint facilities to boost their export business are complaining of undue delay in procuring world class capital goods. The delay is on account of the insistence of the Ministry of Commerce and Industry on the submission of a copy of the drug manufacturing license for the import of capital goods under Export Promotion Capital Goods (EPCG) Scheme.

The industrialists point out that they cannot obtain any manufacturing license prior to the setting up of the unit, for which installation of capital goods are necessary.

As per central directives, all new manufacturing facilities should have GMP facilities as per the revised Schedule M in place before they can apply for a manufacturing license. The licenses are issued after the drug authorities verify/inspect these manufacturing premises/plant/facilities. The insistence of the Ministry of Commerce has compelled the manufacturers to either avoid seeking the fiscal benefits or suffer the perils of the delay. Delay in setting up the plant increases cost of installation thereby will have a negative effect on the cost competitiveness of the final product.

The Commerce Ministry decision to bring in "drug manufacturing license" as a pre-condition to clear the application for import of capital goods under EPCG Scheme came to effect in September 2003. The Public Notice No.26 (RE-03) issued on 30.9.2003 by the Director General of Foreign Trade amended the Handbook of Procedures (Vol.1) of the Exim Policy to include "a copy of Drug Manufacturing License in case of export of Pharmaceutical product or copy of IEM/SSI Registration Number in case of other products" also among the requirements for availing EPCG Scheme.

It is known that the pre-condition is troubling the pharmaceutical manufacturers who are in the process of setting up new manufacturing facilities in industrial areas. Companies who are diversifying into biotechnology sector are also going for import of capital goods under EPCG scheme in a big way.

The industrialists have represented the case before the Commerce Ministry through The Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (Chemexcil) and is looking for a relaxation of this condition during the budget session of the Parliament.