PwC India which chips in its expertise on industry audit, consulting and tax service is eager to see that Union government would provide the much needed impetus to the pharma, biotech and health insurance in the Budget 2014.

To begin with, the government needs to create technology parks similar to IT/ITES parks, for the pharma and biotech sector to support efforts in attaining self-reliance on the scientific and economic growth front, said Sujay Shetty, leader pharma & life sciences, PwC India.

It would need to allocate Rs.500 crore annually from the R&D cess accessible by the Technology Development Board and should be used to stimulate the pharma, biotech sector across the range, from human resource development, high-end institutional development in bio-pharma, stimulate incubators, ignition grants, start-ups and small businesses, enable collaborative efforts with business of all sizes on one hand and national and international academia on the other.

There is need to also relook on the tax structure where it would require to eliminate service tax for the contract research organisations as this is placing India at a significant disadvantage over some of our neighbors and competitors. We request elimination or substantial reduction in the service tax, especially for overseas clients paying in foreign currency, he added.

Moreover, the current tax incentives of 200 per cent weighted deduction should be increased to 300 per cent with a validity of 10 years. When computing the MAT, weight deduction should be allowed under Sec-35 (2AB). It should allow tax holiday for a period of 10-year indigenously developed bio-pharma drugs. Weighted tax deductions should be applicable to outsourced clinical trials and R&D, preparations of dossiers, foreign consulting/legal fees for NCE (New Chemicals Entities) and ANDA (Abbreviated New Drug Applications) filings with the US FDA and Patent defending charges, stated the PWC lifesciences chief.

In order to give a boost to the start-up culture, the government will need to encourage setting up of venture capital funds focused on investments in biotechnology, all contributions by Indian corporate including pharma and biotech companies to SEBI registered Biotechnology funds should be eligible for the weighted average tax deduction under Section 35 (2AB). Even the not-for-profit, section 25 incubators and biotech/knowledge/science parks should be provided tax exemption, he said.

Corporate Social Responsibility (CSR) funds may be used for stimulating public-good and socially- relevant research in collaboration through partnership with the Biotechnology Industry Research Assistance Council (BIRAC) of the Department of Biotechnology (DBT). All such contributions to BIRAC should be fully-tax exempt. As of now only incubators in academic institutions are eligible for availing CSR funds for promoting innovation. “Although this was a government order issued last year, efforts should be made to extend this to all incubators covering the lifesciences category, whether they are part of academic institutions or not”, he said.

On the health insurance front, the government should raise the premium deductibility from the current cap of Rs.15,000 to Rs.30,000. It should also permit the hike in foreign direct investment (FDI) in health insurance companies to 49 per cent, stated Shetty.