The captains of the pharmaceutical industry have urged the Finance Ministry to remove withholding taxes on R&D and allow provisions to include expenses on clinical trials as part of R&D expenditures of the firms.

The leaders of the pharma industry, in their recent pre-budget interaction with Finance Minister P Chidambaram, wanted the Government to enhance the abatement rates for drugs while calculating the excise duty on MRP. The drug industry urged the Finance Minister to take steps to include overseas expenditure on R&D for exemption purposes, in a bid to boost the research activities in the sector.

The participants asked for extension of the weighted deduction indefinitely or at least for another 15 years for R&D expenses, which is due to expire in March 2007. Industry leaders like Malvinder Singh of Ranbaxy, Kiran Mazumdar-Shaw, Swati Piramal and R Seshasayee were among those who took part in the interactions.

Apart from leaders of the pharmaceutical industry, representatives from other associations and chambers of commerce and industry also echoed similar feelings in the meeting.

Another prominent demand by the pharma industry was to set up training institutes for biotechnology, taking into account the latest strides in the sector. There was also a demand to extend maximum incentives for research and development activities in the sector.

Setting up of a skill development bank and facilitate intermediation of knowledge, removal of anomalies in customs and excise duty structure and providing of incentives for Indian companies to become global were among the other proposals made by the industry.

The Finance Minister requested the participants to give their views on specific actionable points- tax and non-tax - to impart a new impetus to growth and investment by removing the existing obstacles. The meeting was also attended by Ministers of State for Finance Pawan Bansal and S S Palanimanickam and senior officials of the Ministry of Finance.

The Economic Advisory Council and the Chemicals Ministry have already recommended hiking of the abatement rate from 40 per cent to 45 per cent for all drugs and as a special case, from 40 to 80 per cent for the small scale pharma units.