The Pharmaceutical Exports Promotion Council (Pharmexcil) has suggested the director general of Foreign Trade (DGFT) to have a re-look into various policy decisions implemented lately through the Foreign Trade Policy (FTP) 2009-14.

In an annual review meeting of the Policy chaired by RS Gujral, DGFT, the council suggested that the office should reconsider implementation of a minimum 15 per cent value addition criteria introduced on imported inputs under Advance Authorization Scheme and sought a close working relationship with the nation's drug regulator to expedite the export import clearances.

According to a recent announcement by the DGFT, the companies have to make sure that the product meant for exports should have at least 15 per cent value addition from whatever value it has when the active pharmaceutical ingredients (APIs) or the raw material was imported, to get the benefit of the Advance Authorisation Scheme for imports of bulk drugs. An Advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage).

“This would severely impact the exports with high import content or low realization. Particularly API exports would be most severely impacted. Most of the APIs are produced with raw materials (up to penultimate stage) imported from China, with a minimum value addition. This should be replaced with earlier policy provisions of 'Positive Value Addition',” suggested Smitesh Shah, chairman, Pharmexcil in the review meeting with the DGFT.

For instance, for products like the antibiotic erythromycin, the value addition for finished products could hardly reach the criteria, say industry experts. The council is collecting details on such products which could not meet the value addition criteria to support its suggestion.

The council requested the DG to make exporters for two more countries – Russia and Iraq – eligible for duty credit on FOB under the under Market Linked Focus Products Scrip (MLFPS) in the Policy. The MLFPS notification under the new trade policy has enabled exports of pharma products to 13 more countries, namely Algeria, Brazil, Egypt, Kenya, Mexico, Nigeria, South Africa, Tanzania, Ukraine, Australia, New Zealand, Cambodia and Vietnam, to get a duty credit of two per cent on FOB.

The council has also requested the DGFT to incentivise MLFPS from two to three per cent of FOB at par with focus market or product scrips. “Pharma Products to Russia and Iraq have an immense export potential. Incentivizing such exports will encourage exporters in increasing their exports to these two countries,” said Shah in his presentation.

Considering the huge potential for the creams and lotions in the overseas market, the Pharmexcil requested the DGFT to provide DEPB rate for creams and lotions for exports made from India, for which all the exporters are already claiming packing materials used in such products.