The Central Government has exempted the import of approved/unapproved drugs under Advance Licensing Scheme from the newly introduced import registration obligations. Exclusive EOUs and drug units functioning in EPZs and SEZs are also exempted from the condition of registration. However there will not be any blanket exemption on the import of drugs / raw materials for purpose of clinical trials and for formulation development and exemption of import registration formalities in such cases would be permitted on case to case basis.

The Union Ministry of Commerce, in its notification dated June 30, 2003 has laid down fresh set of conditions under which free import of bulk drugs under ALC Scheme can be carried out.

As per the notification, import license will be given only against an existing valid export order and to the extent raw material is required as per that order. The Drug Controller would be a member of the Advance Licensing Committee and a copy of the licence would be endorsed to the Drug Controller and the concerned state drug controller. The central and state drug authorities have been given the powers to carry out random inspections also.

The notification further clarified that any violation is punishable under the Foreign Trade Development and Regulation Act and the Customs Act. There is also provision for the office of the Drugs Controller General of India to penalize the manufacturing units in terms of suspension or cancellation of licenses.

The other conditions include the fulfillment of the pre import conditions and also the export obligation within a period of six months from the date of issuance of the license.

The government has also clarified that the authorities should accept the Form-9 issued by the registered manufacturers for the purpose of issuing Form-10 license under the Drugs and Cosmetics Act.

The government decision has come as a major relief for the Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (Chemexcil), which had been pleading hard for the exemption for some time.

Speaking to Pharmabiz.com, Satish W Wagh, Chairman Chemexcil pointed out that the government decision is to solve most of the current problems being faced by the exporting community. "The council had recommended the best precautions to be taken while giving such a recommendation. The government has been pro-active and has been able to put an end to the uncertainty faced by the exporters for weeks now," he said.

Indian companies were also facing charges of defaulting from import contracts from several foreign companies after they failed to honour the orders due to the registration norms imposed on them, he explained.

It is known that the notification will also help the office of the DCGI, which had been finding it impossible to clear all pending import registration applications within a short time. Most of the imports that got stuck after the new rules came in place in April 2003 are from South East Asian countries. The Chinese companies were going back from meeting the import registration obligations thereby compelling Indian exporters to go for more expensive markets.

The pharma companies, especially the small-scale sector, were after the ministry with this plea as many of the companies suffered major setbacks on export front after the bulk drugs for re-exports come under the compulsory license scheme.