The first meeting of the pharma-subgroup of National Manufacturing Competitiveness Council (NMCC) has identified the implementation of Schedule M as key to competitiveness in Indian pharmaceutical industry.

The meeting suggested various fiscal and non-fiscal incentives to non-schedule M compliant drug units for carrying out necessary upgradation of their facilities. The strengthening of Drug regulatory mechanism, support to R&D and generation of technically qualified human resources were the other issues that were given top priority by the sub group.

According to sources, the meeting, held here on May 12, called for rules that make Schedule M compliance a pre-requisite for export of drugs. The sub-group felt that such a restriction would ensure the quality of drugs that are exported from the country. The members of the sub-group also suggested a differential treatment from National Pharmaceutical Pricing Authority to Schedule M and non-Schedule M units while fixing the prices of scheduled formulations.

The additional mark up is to be offered to Schedule M compliant units for the additional expenses incurred in upgrading their facilities. All sub-group members including SSI representatives backed this recommendation made by Indian Pharmaceutical Alliance, it is learnt.

The suggestion for the creation of a Rs 1000 crore fund like the Technology Upgradation Fund existing for the textile sector has also been made. The proposal is to disburse this fund as grants and subsidy to units who intend to upgrade themselves to Schedule M specifications.

The introduction of tax-credit concept for encouraging R&D is another major suggestion that came to the notice of the sub-group. The R&D oriented drug units wanted the government to give back 40 to 50 per cent of the amount spent on R&D as tax credits. According to sub-group members, the 150 per cent weighted deduction, which is currently provided on R&D needs to be enlarged at the earliest.

The sub-group also emphasized the need for implementing Mashelkar Committee report on drug regulatory reforms. It felt that the formation of Central Drugs Authority (CDA) has become a necessity in the wake of the fresh challenges before Indian pharmaceutical sector. The industry also called for the setting up of at least 10 more NIPER like institutions for grooming world class pharma professionals. The need for qualified personnel in regulatory system, industry and R&D was given due consideration.

The sub-group is to circulate the minutes of the meeting before finalising its report. The sub-group would also invite one-to-one hearing from all concerned for fine-tuning its recommendations. The sub-group is represented by the officials from all related ministries, drug regulatory officials, representatives of associations representing all sections of the industry, R&D institutions etc.