Even as the Department of Pharmaceuticals (DoP) is working on the nittty-gritties for extending the Credit Linked Capital Subsidy Scheme (CLCSS) for assisting the SMEs in implementing the Good Laboratory Practices (GLP), there is an air of apprehension among the small units about the utility of such a scheme due to some unfriendly clauses in the CLCSS scheme.

Industry sources said that the major lacuna in the scheme is the provision of submitting three years balance sheet showing profits. It is simply not possible for a large number of small units as they have turned loss-making units due to the government's flawed policies like MRP-based excise collection announced in 2005 and the creation of tax holiday zones in the country. “In case the government wants to avert failure of CLCSS a second time, the clause of profit during preceding three years should be waived”, said SPIC secretary general Jagdeep Singh.

It is an insult to injury as government itself made 90 percent of pharma SMEs outside the Excise Free Zones (EFZ) unviable by levy of anomalous MRP-based excise and then wanted them to upgrade to GMP at an enormous cost. Circumstances have not changed despite Prime Ministerial intervention of 2006 which mandated levy of excise on contract manufacturing in EFZ so that prices are also brought down. Millions of traders are misusing the Tax Holiday to source their brands from EFZ at MRP of choice on which NPPA has no control. Since major production remains with EFZ, most units elsewhere in the country are incurring losses, Singh said.

In fact, the DoP was seriously contemplating last year to roll back this much publicised CLCSS scheme due to the extremely poor response from the industry due to the unfriendly clauses. But the DoP later decided to extend the jinxed CLCSS scheme to the GLP on industry's demand after the scheme, which was originally launched by the DoP for Schedule M implementation, failed to cut much ice with the industry due to several lacunae in the scheme.

Apart from asking the DoP to continue the financial support to the small pharma units by continuing the CLCSS scheme for the technical upgradation of their units under Schedule M, the industry had also asked the DoP that the upgrading required under the Schedule L-1 for GLP should also be included in the CLCSS scheme as the small industries are in dire need of financial support from the government for upgrading their units as per the GLP norms set by the union health ministry.