IT and Industries Minister KT Rama Rao on Wednesday suggested a series of measures required to be taken by the Centre to help the pharma industry which was facing several challenges especially financial burden due to lockdown. He urged Union Minister DV Sadananda Gowda to for expeditious action and a much-needed stimulus for the pharma industry to reboot and accelerate production of bulk drugs.
In a six page letter to the Union Minister, Rama Rao proposed both short-term and long-term measures to consolidate the country’s leadership position by attracting newer investments from around the world. He urged the Union government to expedite both income tax and GST refunds to the pharma companies. He also strongly recommended for extension of a moratorium on tax payments for next six months, at least for MSME sector to ease their financial stress.
The Industries Minister wanted the Centre to reduce the GST on APIs (Active Pharmaceutical Ingredients) to 12 per cent on par with formulations and prevent input tax credit, allowing companies to have better working capital. He emphasised the need to allow the bulk drug exporters to use un-utilised GST credits towards payment of their GST liability on imports. “I request the Government of India to review all pending incentives cases under various schemes, clear the incentive backlog and expedite release to exporters to reduce financial burden,” he said.
In the wake of China offering 13 per cent export incentives, Rama Rao said India must consider substantial export incentives to the Indian pharma companies to aggressively promote exports. He felt that the Union government should consider lowering the capital borrowing costs for pharmaceutical industry and ensure that the commercial banks pass on the benefits, of interest rates reduction by RBI from time to time, to the industries.
Considering supply chain issues and exorbitant increase in input cost of manufacturing, the Minister suggested that the Centre provide interim relief to pharma industry by relaxing the price control norms and allow additional 10 per cent increase in prices above the existing allowance. Observing delay in getting clearances for imported raw materials and shortage of labour, he said the containers are getting piled up at the ports resulting in increase in maintenance costs of shipment. “Therefore, the Central government should instruct the port authorities to expedite the custom clearances to help companies avoid additional costs. It should also consider waiving off port related costs for at least six months,” he added.
Rama Rao urged the Centre to form a pharmaceutical-based task force to ensure Ease of Doing Business including regulatory approvals, approvals from State governments, port level clearances, and clearances for deploying manpower among others. He also suggested for maintaining a Pharmaceutical Critical Reserve Inventory for both API and formulations for at least three months in regulatory approved warehouses in the country at its cost or at least reimburse the same to the pharma industry at a later date.
The Industries Minister also recommended for certain long-term measures by India to seize the opportunity presented by the Covid-19 pandemic outbreak. “India has the potential to emerge as the leading hub for pharmaceutical manufacturing and therefore as a country we need to put in concerted efforts,” he asserted.
To reduce dependence on China for APIs, Rama Rao emphasised the need to build integrated mega pharma parks. He pointed out that the Telangana government was already developing world’s largest integrated Pharma cluster – Hyderabad Pharma City in 19,333 acres. The cluster, which is also accorded the status of National Investment and Manufacturing Zone (NIMZ) by the Union government is now ready for launch with over 10,000 acres of land already in possession and all necessary statutory clearances including environment clearance.
“I would like to recommend that the Department of Pharmaceuticals promote this mega project as the de-facto location for pharmaceutical manufacturing as well as Research and Development (R&D) in India. The Centre can forge multi-lateral ties with EU countries and US to emerge as an alternate to China,” he said. He suggested for forming a task force to evaluate and arrive at harmonious standards that help improve the overall perception on the Indian industry and also facilitating bilateral ties by reaching out to countries in South Asia for mutually beneficial trade.
The Minister wanted the Central government to act fast and bring out a new pharmaceutical policy to attract new investments in India. He suggested for a task force in tandem with Department of Pharmaceutical, Department of Promotion of Investment and Internal Trade, Ministry of External Affairs and select State governments to come up with a strategy to promote investments in the country. To promote pharma exports, he recommended for a pharma export promotion scheme replacing the existing schemes and help the pharma sector to offset the impact of increase in prices of import materials.
Among other suggestions, Rama Rao reiterated the need to strengthen the MSMEs by announcing a Pharma MSME specific package. He wanted the Union government to review and increase the investment criteria of Rs 10 crore presently used in the MSME classification, setting a turnover upto Rs 250 crores as a slab for representing MSMEs. He also suggested for facilitating access to credit for MSMEs by reducing interest rates on the borrowed capital among others. He also asserted that the government should support creation of a strong R&D system.
The Minister highlighted the need to facilitate faster approvals from global regulatory agencies and sought the Centre’s support for setting up a Regulatory Enclave in the Hyderabad Pharma City to house offices of major regulatory agencies to facilitate regulatory clearances.
– Telangana Today