New Delhi: The domestic pharmaceutical industry today welcomed Finance Minister P Chidambaram's proposal to cut excise duty on drugs and said the move will help in making medicines more affordable to the common man.
Hailing the Budget as extremely positive, Ranbaxy Chairman and Managing Director Malvinder Mohan Singh said apart from excise cuts, the Finance Minister's decision to include outsourced research and development operations under the exemption limits would boost drug discovery operations in the country.
"Outsourced R&D has been given a 125 per cent weighted tax deduction and it is certainly expected to boost the sector in a major way. Overall, it is extremely positive for us keeping in mind that this is the last full fiscal budget of this Government," Singh said.
He said the move would boost investments in R&D and would encourage a lot of contract researchers to set shops in India.
The Finance Minister proposed to totally exempt certain specified life saving drugs and bulk drugs used in the manufacturing of such drugs from excise duty while reducing customs duty on such products to five per cent from the present 10 per cent.
Addressing pharmaceutical industry's long pending demand, Chidambaram has also proposed to reduce excise duty on all goods produced in pharmaceutical sectors to eight per cent from 16 per cent.
Drug price regulator National Pharmaceutical Pricing Authority (NPPA) Chairman Ashok Kumar said the Finance Minister's move to cut excise duty would ensure better availability of drugs to patients.
"From NPPA's point of view, Finance Minister's proposals would certainly increase the availability of drugs and would reduce prices which would benefit customers. We do hope that industry would pass on the benefits to the customers," Kumar said.
Bulk drug manufacturer Arch Pharmalabs' Managing Director Ajit A Kamath said the excise duty cut would ensure development of pharmaceutical industry across the country.
"Due to excise benefits, a lot of manufacturers were migrating to tax heavens in Uttarakhand and Himachal Pradesh. The excise duty cut would ensure balanced growth of the industry across the country," Kamath said.
He, however, said that Finance Minister could have incentivised R&D activities further.
Echoing this view, Nicholas Piramal said that budget is disappointing for R&D.
"It is a pro bio-pharma budget and would help small scale units but it is disappointing from R&D point of view," a Nicholas Piramal spokesperson said.
Alok Saxena, Director of Elder Pharmaceuticals, said the budget could have a negative impact on contract manufacturing companies operating in excise free zones.
"A well-balanced budget with good sops for pharmaceutical industry. It could, however, have a negative impact on contract manufacturing companies operating in excise free areas," Saxena said.
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