To find some lasting solutions to the financing problems of the SME pharma exporters in the country, the union commerce ministry has called a meeting on April 13 in which difficulties being faced by the SME sector in obtaining the credit from banks and sanction of adequate limits, etc. due to methodology being adopted by commercial banks in fixing the loan limit, etc will be thrashed out.

Sources said that the SME pharma sector in the country is facing serious financing problems due to the methodology being adopted by commercial banks in fixing the loan limit, etc.  Banks deny export credit to SME sector on the pretext of volatile condition in the target market and also due to non-inclusion of Foreign Bill Negotiation against LC in the exposure limit. Banks also deny export credit to SME sector seeking more collateral guarantees and they also resort to denial of foreign currency packing credit to SME sector.

For a long time, Pharmexcil's SME panel has been asking the commerce ministry to find a lasting solution to the issue.

Faced with severe financing issues, the pharma exporters have been demanding to the government to earmark 50 per cent of foreign currency loan and foreign currency packing credit by banks for SME sector and also that the cover of ECGC should be taken as guarantees by banks. The exporters have been demanding that the banks should liberally finance for Focus Areas identified in Foreign Trade Policy announced by the Union commerce ministry. Besides, the exporters have been demanding that 25 per cent of Exim Bank line of credit should be earmarked for SME sector. They have also been asking for liberal credit by banks for upgradation to WHO GMP/US FDA for pharma SME sector.

Though the industry had taken up the matter with the RBI, no solution could be found on this issue so far which has been pending for quite some time since the Schedule-M of the Drugs and Cosmetics Act was amended by Health ministry in 2005 making GMP compulsory.

Amendments in Drugs and Cosmetics Act mandating compulsory adoption of Good Manufacturing Practices (GMP) and Good Laboratory Practices (GLP) have resulted in closure of SME units which did not have the financial capability to afford the cost involved.

Schedule-L of D&C Act was amended in November 2010 for adoption of GLP. Since no State or Central Government lab is GLP compliant and reference standards for benchmarking quality in government labs is not there, industry feels GLP implementation is meaningless without creating adequate infrastructure at the ground.

The industry has been demanding that GLP and GLP standards should be diluted for ensuring that capacity created by SME to produce affordable drugs and competitiveness in the market is not lost.