The pharma industry associations have jointly requested the Central Government to increase the rate of abatement from 40 per cent to 52 per cent, with a view to absorb the burden of Excise Duty on the pharmaceutical industry, consequent to the MRP Inclusive of All Taxes regime introduced since 2nd October 2006.

In a joint letter to G S Sandhu, Joint Secretary, Department of Chemicals and Petrochemicals, the Indian Drug Manufacturers' Association (IDMA), Indian Pharmaceutical Alliance (IPA) and the Organization of Pharmaceutical Producers of India (OPPI) noted that the current rate of 40 per cent was worked out when local taxes were collected separately and did not form part of the MRP. However, the change effective from 2 October 2006 to "MRP Inclusive of All Taxes" has raised the burden of Excise Duty on the pharmaceutical industry.

"The incidence of increase resulting from this change and some elements of costs not considered earlier while fixing the rate at 40 per cent make a difference of at least 12 percentage points in the rate of abatement. The detailed calculations along with graphic description of distribution channel and rates of trade margins are attached hereto. Therefore the rate of abatement should be increased from 40 per cent to 52 per cent" said the industry associations.

It may be noted Pharmabiz had reported last week that the retail prices of most drugs marketed in the country are likely to go up by over 12 per cent from first week of November as the pharmaceutical industry is set to pass on the additional burden to the consumer with the introduction of MRP inclusive of taxes regime.