The United Progressive Alliance (UPA) Convener Sonia Gandhi has directed the union finance ministry to look into the grievances of the small-scale pharmaceutical units, consequent to its decision of implementing the MRP based excise duty regime, it is learnt.

Replying to a memorandum submitted on the matter to Sonia Gandhi and the Prime Minister Manmohan Singh during last week, Sonia Gandhi has written a personal letter to P K Gupta, co-chairman, the Confederation of Indian Pharmaceutical Industries (CIPI-SSI), assuring to solve the problems of the SSI units due to the decision. "I shall take up the matter with the ministry of finance," said the letter from UPA convener.

CIPI requested urgent intervention of the Prime Minister and the UPA convener to solve the issue citing sudden arbitrary decision of the finance ministry to levy Excise Duty based on MRP has caused severe stalemate in the industry. The organization also complained that the finance minister was yet to consider its letter dated January 12, 2005 requesting to reconsider the notification.

CIPI said that the decision would cause 40 per cent increase in the cost of production, which cannot be passed on to the consumer. SSI Pharmaceutical companies are mainly thriving on contract manufacturing for larger companies, who will now withdraw the contract and get the products manufactured in Excise free states such as Uttaranchal, Himachal Pradesh, Jammu & Kashmir, Pondicherry etc. A large number of pharma units have made additional investments to meet the revised Drugs Act to meet the global standards. They are virtually stranded. The industry is already burdened with WTO, Drugs Act, revision of Schedule M, Drugs Price Control Order and VAT, and therefore, they cannot take any additional burden, CIPI says.

The CIPI memorandum said the repercussions of the notification will lead to the closure of SSI units numbering nearly 5000, unemployment, shortage of medicines, uncertain future of pharmacy education in India and non-performing assets of financial institutions who have invested approximately Rs 7000 crore in about 5000 such units.

CIPI also suggested to the UPA convener and the PM to arrange for forming a new committee with a representative from CIPI to re-look the decision, and assured to convince the government on the adverse implications and provide alternate duty structure conducive for both the government and the pharma industry.