It is small versus big in the pharmaceutical industry on the controversial issue of withdrawing tax exemption to contract manufacturers in the tax-exempt zones. While the central government is seriously considering to restrict the excise duty exemption to manufacturers who manufacture under their own license for providing a level playing field to thousands of small units, the IDMA is learnt to be using all its resources to stall it as most of its members have units in the tax-exempt zones like Baddi.

According to sources, IDMA president BN Singh led a delegation to the Prime Minister's Office (PMO) early this month on this issue and met Minister of State in the PMO Prithviraj Chouhan. The delegation later submitted a memorandum listing the adverse effects if the excise exemption is withdrawn to the contract manufacturers in the excise-free zones. The delegation also met several senior officials in the PMO including Vini Mahajan, joint secretary. Besides, immense lobbying is also going on in Delhi to stall it, sources said.

It may be noted that ever since the implementation of MRP-based excise in 2005, thousands of small pharma units under the banner of Confederation of Indian Pharmaceutical Industries (CIPI) have been knocking at the doors of the central government for providing them a level playing field as shifting to tax-free zones was not financially viable to them. As the government refused to provide any tax soap to them, they pleaded for withdrawing excise benefits to the contract manufacturers in the exempt zone as that will provide them some kind of level playing field. The Economic Advisory Committee (EAC), constituted by Prime Minister, had also recommended the same.

Meanwhile, feigning ignorance about the issue, IDMA president BN Singh denied that the IDMA ever made a representation to the PMO on the issue of excise withdrawal to the contract manufacturers. "I led an IDMA delegation early this month to the PMO to submit a memorandum addressed to the GoM. It was all about the pharma policy and some other concessions to the industry", he said.

But, fissures are already visible between the CIPI and the IDMA, which represents medium and big companies. The more than 5000 members of the CIPI are agitated over the issue. They have started asking the CIPI chairman to take care of the interests of the small units. "After IDMA took a delegation headed by BN Singh to PMO last week to press non implementation of EAC recommendation of withdrawal of excise exemption on contract manufacturing in exempt States, it became imperative to obtain information on various issues relating to SSI. Also because a lot of effort has been made to take many issues to higher pitch, SSI interest needs to be watched", read a letter to CIPI chairman TS Jaishankar.

When contacted, Jaishankar said, "Our members are terribly shocked. Our own people are working against us. The government is also trying to divide the industry".

However, he said the CIPI has convinced the PMO, Finance Minster and Chemicals Minister about the need to restrict the excise duty exemption in the exempt zones to manufacturers who manufacture under their own license only.