The Katoch Committee on Active Pharmaceuticals Ingredients (APIs), constituted by the department of pharmaceuticals (DoP), has made sweeping recommendations for revival of API manufacturing in India including tax free status to cluster developers and cluster participants for 15 years.

Immediate financial investment will be required from the government for development of clusters which may be in the form of a professionally managed dedicated equity fund for the promotion of manufacture of APIs. All central and state duties, taxes, levies etc in creating the entire community cluster infrastructure and individual unit infrastructure should be zero. If a unit promises more than 50 per cent capacity utilized for NLEM products then at least these benefits should be given, the panel recommended.

The panel also recommended soft loans to the industry through interest subvention upto 7.5 per cent, at least at par with interbank lending rates. Capex loan to the manufacturers of APIs for high priority identified drugs, with a moratorium of 10 years for repayment was recommended. Alternatively debt instruments should be long term ie 3+5 years for APIs/intermediates and 3+7 years duration for fermentation. Margin money for strategic projects should be cut down, preferably to 15 per cent equity and 85 per cent debt.

To encourage foreign investment, the committee recommended that faster clearances, funding for green field/brown field areas should be appropriately analyzed and support should be encouraged for the brownfield technologies.

Income tax rebates on upgradation of the existing R&D facilities should be doubled to 400 per cent from existing 200 per cent so as to encourage new development. Income tax benefits should be given for manufacturing companies for an initial period of 10 years for each product from the date of launch of the product, the committee further recommended.

A long term strategy keeping a goal of strengthening API sector by involving ministry of commerce as well as other regulatory authorities is required, the committee recommended and suggested judicious and liberal use of measures like anti-dumping, safeguards/duties, reciprocation and application of rules of origin.

The DoP has now asked the industry associations like IDMA, IPA, OPPI and BDMA to provide their comments latest by October 12, 2015.