The Organisation of Pharmaceutical Producers of India (OPPI) has urged the Union Finance Ministry to extend the tax incentives to the research and development (R&D) in pharma industry till 2017 and also appealed to cut excise duty on pharma products from the existing 16 per cent to 8 per cent in the coming budget.

In a pre-budget memorandum to the government, the OPPI said that with Intellectual Property (IPR) regime in place, an environment which encourages R&D and innovation is the need of the hour. Since pharmaceutical discovery process is lengthy and takes anywhere between 9 to 12 years, tax incentives for R & D should be extended upto March 31, 2017. International clinical trials carried out in approved hospitals in India should also be included in this tax incentives scheme as these trials are an integral part of the discovery process.

The Pharmaceutical Industry is playing a key role in the economic and social development of the country by discovering, developing, manufacturing and distributing quality medicines at reasonable prices. Being a knowledge based industry, it has a great potential to be a leading global player. To achieve its full growth potential it requires pro-active policy support. The Budget will be an important instrument to achieve this objective. To ensure that pharmaceutical business operates in an environment of certainty, the policy decisions taken in the Budget should continue for a period of at least three years, the OPPI said.

In order to make medicines affordable to the poor people, the OPPI demanded that the excise duty should be reduced to 8 per cent from 16 per cent. The abatement should be increased to 45 per cent from the existing 40 per cent. To make Indian pharmaceutical industry globally competitive, the present import duty (customs) of 12.5 per cent should be brought down to ASEAN level of 5 per cent.

As for the transfer pricing, the OPPI said that with Indian economy getting globalised, it is essential to harmonise our transfer pricing regulations with OECD countries. The current penalties of 100 per cent to 300 per cent for transfer pricing adjustments are too harsh and need to be reduced to international levels of 0 per cent to 40 per cent. Also there is no advance pricing mechanism at the moment. This should be provided in the transfer pricing mechanism. This will go a long way in minimising long drawn litigation and provide certainty of business.

The OPPI also demanded that the life-saving drugs should be fully exempted from customs duty (at present they attract 5 per cent to 12.5 per cent).