Leading industry bodies involved with drugs and pharmaceuticals and allied sector in the country responded to Union Budget 2003-04 with mixed reactions.

Yogin Majmudar,
President, Indian Drug Manufacturers Association

Overall a growth oriented budget, more significant to the manufacturing sector than any other. A status similar to IT sector for the pharma and biotech industry is great. Good for the hospital sector with an encouraging stage set for private investment, better tax benefits, improved schemes on health insurance, all are a welcome move. Customs duty had to be maintained at 30 per cent. Good on the life saving products point of view, however the matter will be more clear, when the actual list of drugs is introduced.

Ajit Dangi,
Director General, Organization of Pharmaceutical Producers of India

The budget was largely positive although there have been some concerns. The tax exemption for patent procedure has been kept at $ 6,000, which is meager and will make not much difference. In my view, there has to be a minimum benefit of $ 500,000.

The import duty on bulk drugs has been reduced by only five per cent, to 25 per cent. We think it should have been reduced to 20 per cent. The government is still not ready to get out of its over protecting mode of the domestic industry. The central excise duty has been kept at 16 per cent, which should have come down to 8 per cent.

D.G. Shah,
Secretary General, Indian Pharmaceutical Alliance

Pharma and biotech sector would be getting benefits similar to IT, which is great. It is also clear that pharma will be getting income tax benefits similar to the IT industry. Big boost for R&D like the tax holiday, relaxation of the import duty for the equipments needed for R&D and clinical trials, reduction of GP on the import of R&D equipments to 5 per cent from 55 per cent, IT exemption of the income from R&D, et al have been welcomed by the industry. The abolition of excise duty on the life saving equipment from the earlier 16 per cent has been great. The finance minister has also made it clear that excise duty based on MRP will not be applied.

Ashok Soota,
President, Confederation of Indian Industries

We at CII expected a growth oriented, reformist budget from the Finance Minister. But we couldn't imagine the extent to which he would take the reform process forward. This Union Budget 2003-04 takes into account almost all of CII's recommendations, and in fact has exceeded all our expectations.

The importance given to the healthcare sector by not only reducing customs duties on medical equipment and allowing 40% depreciation on some of these, but also by giving this sector infrastructure status is encouraging. This is an excellent budget. If we were asked to rate it, the overall opinion of the members would be in the region of 9 out of 10.

Dr A C Muthiah
President, FICCI

For the pharmaceutical sector, there are reasons to cheer. The benefits granted to the sector at par with IT sector will boost the prospects of Indian pharmaceutical sector substantially.

Continuation of tax benefits under section 10A & 10 B for EOUs, EPZs, SEZs, abolition of long term capital gains on listed securities and exemption of dividend tax in the hands of shareholders, removal and reduction of surcharge on income tax, further rationalization of excise and customs duty structure are also encouraging.

Devindar Pal,
President, PAMDAL

Duty rationalization on all fronts have been a good move. The budget has been very good to the manufacturing sector. The removal of capital gains tax and dividend tax will flock investors once again to the stock markets.

T S Jaishankar
President, Pharmaceutical Manufacturers' Association of Tamil Nadu

The Union Budget on whole is interesting but has failed to define in larger perspective some of the points. The current budget has been an improvement over the last year budget but as in the case of the last year budget there still exist lacunae which have not been defined precisely. Moreover, it has not given that much of "punch" to the pharmaceutical sector.

Though the budget has specified the tax exemption for R&D activities it has not defined precisely the R&D activities. Whether expenditure on clinical trials and regulatory approvals are part of the R&D activities has not been precisely defined. The budget however will help spurt the share prices of A grade pharma scrips.