Keen to escape the skewed tax regime prevalent in the country, Gujarat based pharma companies have expressed full support to go ahead with the goods and services tax (GST). Industry experts strongly believe that the benefits of implementing GST at this point clearly outweighs the risk, as it simplifies current tax structure to bring in operational efficiency.

Touted as India’s biggest indirect tax reform, GST is expected to bring in a huge reprieve to the sector that has been plagued by multiple taxes that are charged today. Most importantly, the industry is hopeful that it will end the era of beneficial tax treatment or special incentives enjoyed by some states like Himachal Pradesh and Uttarakhand as tax free zones for manufacturing goods.

Today Gujarat contributes to 33 per cent of India’s pharma sector turnover. However, Viranchi Shah, vice chairman of the Indian Drugs Manufacturer's Association (IDMA)- Gujarat State Board pointed out that ten years back before the Central government started dolling out tax havens, Gujarat’s contribution was over 40 per cent, which unfortunately fell due to companies migrating to tax free zones.

“The skewed tax system definitely had a toll on the sector in Gujarat as many companies chose to relocate their base to enjoy tax incentives. But thankfully compared to other states, Gujarat recovered from it soon after. Thanks to the aggressive pro industry policies and strong drug regulatory system adopted in the state. With the policy makers active backing, the pharma industry has been able to sustain competitive market and skewed tax regime,”

In spite of having competition from tax havens, Gujarat still have been able to attract large investment opportunity for pharma.  As on August, 2016, Gujarat has total 3415 licensed drug-manufacturing units. Gujarat Food and Drug Control Administration (FDCA), informs that currently it has 2339 allopathic manufacturing units, 679 ayurvedic, 389 cosmetic units and eight homoeopathic manufacturing units.

Shah stressed that once GST comes into place it will help in attracting more investors into Gujarat, as it will create a level playing field for pharma companies that will eventually turn out to benefit consumers.