Even as the Central Government is busy with the preparations for Union Budget 2006-07, the only major budget announcement made in favour of R&D intensive Indian pharmaceutical sector during the previous budget (2005-06) remains a non-starter.

The announcement, to enhance the scope of the annual drug R&D fund from the current Rs 12 crore (accumulated interest from Rs 150 crore corpus) to an annual allocation of Rs 150 crore as Pharmaceuticals Research and Development Support Fund (PRDSF) is still a pipe dream for the domestic pharma sector.

Anticipating the fund, a good number of pharmaceutical companies had applied to the Department of Science and Technology (DST) for availing the benefit. Interestingly, the DST is also known to have processed most of the applications, thereby clearing the technical hurdles before the disbursement of the fund. With everything else through, the industry is now anxiously waiting for the Finance Ministry clearance of the fund now.

It should be recalled that Kapil Sibal, minister of state for science and technology, had called a press conference post Union Budget 2005-06 to give details about the enhanced fund. The minister had promised that the fund would be given as soft loans and also as technology support for both industrial as well as public-private-partnership drug R&D.

It is known that the Finance Ministry had some second thoughts over the sudden increase in drug R&D support allocation from Rs 12 crore to Rs 150 crore. The clearance of the additional fund would now depend upon the ability of the industry and the Ministry of Science and Technology to take up the case before the Finance Ministry. Hopeful of a positive outcome, the Science and Technology Ministry is known to have decided to ready with the list of R&D programmes that have qualified for the support. The ministry wants to disburse the amount even if it gets the Finance Ministry clearance on the last day of the current financial year.

The industry, however, is not so hopeful. Industry sources informed that they are deeply worried about the lack of timely clearance of the fund.