Even as the industry bodies continued their attempts to revive the tax holiday schemes in many pharma hubs like Himachal Pradesh and Uttarakhand, the Department of Pharmaceuticals (DoP) has proposed creation of exclusive special economic zones (SEZ) for pharma units in many parts of the country.

The DoP has prepared a scheme in this regard and held initial discussions with the Chief Ministers of some States in this regard. The responses from the States were encouraging and the proposal would formally be forwarded to Cabinet for approval, sources said.

The proposal for Pharma SEZ was made as the tax holiday scheme in places like HP and Uttarakhand came to an end in March this year and the large numbers of pharma units were feeling the pinch after they moved in to these excise free zones and invested huge amounts, looking for longer term of benefits. As per the proposal, the existing pharma hubs can be converted into pharma SEZs and the units would continue to get the benefits.

The Pharmaceutical Exports Promotion Council (Pharmexcil) had also recently made a suggestion to the Finance Ministry to continue the income tax exemption offered through the SEZ Act, 2005, to all the new SEZ developers and units even after the implementation of the Direct Tax Code (DTC). With the existing norms in DTC, the benefit will be limited to only a handful of units out of the very large export community proposing to have their units in SEZs in near future, according to Pharmexcil. It is learnt that the DoP already had discussions with the chief ministers of Himachal Pradesh and Uttarakhand where a large number of pharma units are apprehensive of their future. The pharma hubs in these two States and some other clusters like Hyderabad and in Maharashtra have also been identified by the DoP for making SEZs, sources said.