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Pharma associations pitch for cut in excise duty as Fin Minister begins pre-budget talks
Joseph Alexander, New Delhi | Thursday, January 10, 2008, 08:00 Hrs  [IST]

With the Finance Minister launching the pre-budget talks to garner views from the industry leaders and associations, the pharmaceutical industry also has started pitching for possible sops, in particular for a cut in the excise duty on pharmaceutical products.

Most of the pharma associations have already shot off their detailed pre-budget memoranda to the Finance Minister and the thrust point was the reduction of excise duty from the current 16 per cent to 8 per cent. And the industry sounded optimistic this time around, as there is pressure on the Finance Minister from different quarters on slashing it.

"Apart from the general issues regarding the small scale sector, we have very strongly demanded for a cut in the excise duty to save especially the SSIs. Besides, we also suggested slashing of interest rate to 5 per cent from the existing 12 per cent on the soft loans for the purpose of implementing Schedule M," said P K Gupta, the co-chairman of Confederation of Indian Pharmaceutical Industry (CIPI).

The IDMA also has strongly argued for the lowering of excise duty on all allopathic as well as ayurvedic drugs. It also sought an increase in the existing abatement of 42.5 per cent to at least 55 per cent.

"The bulk drugs & formulations thereof falling under categories of anti-AIDS, anti-cancer, anti-TB, immune suppressants and other life-saving drugs should be totally exempted from the excise duty. Since most of anti TB drugs are exempted, Rifampicin should also be included in the list of exempted drugs. Considering the long term benefits of R&D to the economy at large, all excisable goods used for R&D purposes should be exempted from Central Excise Duty," according to IDMA representation. They have also voiced for excise duty exemption to physicians samples upto 4 per cent of sales value as earlier.

Sometime back the Finance Minister had refused to accept the recommendation even by the Parliamentary committee to cut the excise duty to 8 per cent, holding that it would cause loss of at least Rs 1000 crore. According to the estimates, the excise duty on pharma products rakes up around Rs 2000 crore every year. However, the Union Chemicals and Fertilisers Ministry has once again taken up the issue and prepared a cabinet note, suggesting the cut in excise duty in the interest of the industry as a whole.

The industry, especially the small scale sector, has been demanding a positive approach from the Government by reducing the present excise duty so that the benefits could be directly passed on to the consumers with lower prices on the drugs. They claimed that cut in the excise rate would be the best possible option to curb the prices of drugs in the markets.

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