The Confederation of Indian Pharma Industry (CIPI), an association of around 7000 small pharma companies in the country, has demanded to Prime Minister Dr Manmohan Singh to immediately withdraw the MRP-based excise collection to save the thousands of small pharma companies in the country who, the Federation alleged, have been victimized to benefit large industry.

In a letter addressed to the Prime Minister dated April 27, CIPI chairman T Jaishankar said that it has been proved that the MRP-based excise collection has failed to serve its twin purposes of avoiding tax evasion and reduction of prices of medicines. The government in its own admission has said that the excise collection during the last year has come down drastically. As far as the prices of medicines are concerned, the prices have gone up as the manufacturers from tax exempt states are selling the products at higher MRPs as they do not have to pay the excise duty. "To maximize profits, traders prefer goods from exempt states which are cheaper being excise free, but bear higher MRPs," the letter said.

"The anti-national implications of a counterproductive policy, including man made price rise, revenue loss and unemployment are serious enough to merit its withdrawal. Sadly even removal of anomalies is being prevented. Unless remedied, it shall stand out as a dark patch in the history of free India especially because eminent economists lead the country", the letter to the PM said.

Alleging that the government policies are aimed at destroying the small pharma units in the country, the letter demanded to the Prime Minister to immediately intervene to implement the Dr Rangarajan recommendations which have recommended higher abatement to the SSIs to offset the losses due to the implementation of the MRP-based excise.

"Around 7000 SSI Units in non exempt states having 10 lakh workers face closure being rendered uncompetitive, handing their 40 per cent of market share to large industry on a platter. Even if they migrate, they shall be unable to recover cost of their plants when GST is levied in 2010. It is not by accident that earlier they were burdened with schedule M whereby they are to rebuild factories to international standards at a huge cost. And finally central drug authority is being created to ensure closure of SSI by strict compliance", the letter regretted.

Calling the government policy of fixing abatement as arbitrary and irresponsible aimed to finish the SSIs at the behest of the large pharma companies, the letter said, "MRP based excise on medicines was a single item notification and abatement was fixed arbitrarily without any data whatsoever as data from SSI is now sought by Revenue department through C&F ministry vide letter dated 20 March 2007 (copy attached). Though Revenue department contends that initially abatement was increased from 35 to 40 per cent on asking of AD ministry but when 80 per cent abatement is sought by it for SSI, it has been rejected on the basis of data from units of oppressed non exempt states. Earlier, Dr Pronab Sen recommendations made under CMP of UPA to reduce excise duty are also rejected. Such is the fervour to wipe out SSI for the sake of large industry that even hon'ble PM's accepted Dr Rangarajan recommendations increasing abatement to a meagre 60 per cent for SSI are sought to be annulled".