Withdrawal of NIL / Concessional Duty as per Notification No.6/2016 – Customs dated 28th January 2016 – Conflicting Reports

We refer to some newspaper reports that the price of lifesaving drugs will go up due to the recent customs notification about removing some items from the lists providing nil/concessional duty. The statements made in these news reports are not representative of the pharmaceutical industry as a whole.

We have scrutinised the 76 drugs mentioned in the above said notification for removal of NIL/Concessional duties and we understand that they have been selected by Government of India on the basis of availability of local manufacturing facilities. This being the case, providing customs duty exemption to this class of imported bulk drugs is not required.

Customs duty on bulk drugs and Intermediates were in the order of 110% 10 years back and at that time the list of life saving drugs were prepared to bring down the cost of medicines.  Now the customs duty + CVD has been reduced to 8.2%.

This is not likely to impact the price of finished products in a big way, since bulk drug is only one part of the total price of formulations, but on the other hand provide a level playing field to local manufacturers.

We observe that out of 76 drugs as per the above Notification No.6/2016, only 15 drugs have nil duty whereas 61 drugs have a concessional duty of 5%, meaning, only an increase of 2.7% in customs duty in importing of the items, which will not have major impact on the finished product prices.  Hence, there is no need for panic.  Patients won’t be affected because of this.

Removal of Nil/Concessional excise duty on imported bulk drugs wherein indigenous manufacturing is available is a right step taken by the Government of India.  This will certainly create a level playing field for indigenous bulk drug manufacturers and support the “Make in India” initiative of our Hon’ble Prime Minister of India.

We shall be grateful for publishing the above clarification in your esteemed newspaper for the benefit of your readers.

S V Veerramani
President
Indian Drug Manufacturers' Association