The Confederation of Indian Pharmaceutical Industries (CIPI), an organisation that claims to have more than 5,000 small companies as its members spread across the length and breadth of the country, seems to be heading for a split, thanks to the neutral stand the organisation has so far taken on the burning issue of withdrawal of excise benefit to the contract manufacturers in the excise free zones like Baddi and Uttaranchal.

Sources in the CIPI said that the quarterly meeting of the organisation, scheduled for August 12 in Kolkatta, is going to be a stormy one with members furious over the stand taken by the organisation on the crucial issue of withdrawal of excise benefit to the contract manufacturers in the excise free zones.

So far, the CIPI has maintained a neutral stand on the issue on the plea that this is a local issue and the CIPI will interfere for common causes only, leaving the state chapters of the organisation to take necessary action. While state chapters like Punjab, Rajasthan, Gujarat, etc have been active in shoving the central government to implement the Dr Rangarajan Committee report, the CIPI was found wanting in providing the much-needed support. Dr Rangarajan Committee report has recommended that "Area-based exemptions should be restricted to manufacturers who manufacture under their own license and not those who undertake contract manufacturing".

Sources in the CIPI said that while the contract manufacturers in the excise free zones are leaving no stones unreturned to prevent the implementation of Dr Rangarajan recommendations, the CIPI has remained a mute spectator leaving some state bodies to fight the might of the contract manufacturers.

If the central government implements the Dr Rangarajan recommendations, the biggest beneficiaries will be the small scale industries which constitute the CIPI as they will get the level playing field in the industry. After the government announced the tax free zones followed by the MRP-based excise, the small-scale pharma units in the country were in real danger of shutting their shops down. Several of them in fact have shut down their shutters. The problem was aggravated by the implementation of Schedule M when the cash-strapped small units were left with no option but to close down their units.

Sources in the CIPI said that this neutral stand of the CIPI has antagonised several state chapters of the national organisation and a sizeable chunk of them are even thinking of splitting the organisation.