Pharma industry seeks sops to cut raw material imports

Visakhapatnam: RATIONALISATION of the GST rate structure and productivity-linked incentives are being sought by the pharma industry in the Union Budget for 2021-22 as a booster dose to reduce import dependence and increase India's share internationally.

Stakeholders in the pharma sector from Andhra Pradesh, which has several leading pharma companies in Visakhapatnam and its neighbourhood, say at a time when the units have proved their worth overcoming the challenge posed by the Covid-19 pandemic, they will be grateful if steps are taken to accelerate further growth of the industry as well as the existing ecosystem.

Investors feel that the process of input subsidy refund under inverted duty structure is cumbersome and needs simplification. Now GST on finished products stands at 12 per cent whereas on active pharmaceutical ingredients (APIs) it is 18 per cent. A simple mechanism is called for.

There is also a demand from the industry for removal of the clause of reversal of input tax credit for all such finished products to be destroyed. Whenever a registered dealer (retailer, wholesaler, distributor, C&F agent) is returning stock by raising invoice, the GST credit should be allowed. Sunil Roy Wadhwa, Head (Operations), Mylan, told Bizz Buzz that there needs to be an incentive for local industry-like tax rebates to replace raw materials sourced from out of the country by indigenisation. More incentives are required to encourage solar power. "Apart from this, we need to have more tax rebates for people working in pharma," he remarked. Calling for raw material security, R Uday Bhaskar, Director-General of Pharmexcil, said 65 to 70 per cent of raw material required by the bulk drug units is currently sourced from China, exposing the country to the risk of a severe shortage of medicines because of dependence.

The issue should be reviewed seriously going by the ongoing trade war between the United States and China following the origin of Covid-19 pandemic from the pharma hub of Wuhan in December 2019. He said local entrepreneurs should be encouraged to reduce dependence on imported raw material by offering them productivity-linked incentives.

There is also a demand from the industry for revival of incentives towards R&D expenses. The Finance Act 2016 has reduced the weighted deduction of R&D expenses under section 35 (2AB) for Department of Scientific & Industrial Research (DSIR)-approved in-house R&D facilities to 150 per cent from April 2016 and 100 per cent from April 2020.

Uday Bhaskar said incentives would make 'Make in India, Digital India, e-Governance and Clean Energy initiatives, all priority areas of the Central Government to achieve innovation, a grand success.

PP Lal Krishna, CEO of Jawaharlal Nehru Pharma City developed by Ramky at Parawada near here, said Andhra Pradesh had great scope to become one of the prominent pharma hubs, if the ecosystem was strengthened with the required infrastructure support.