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Reduce Pharma’s Dependence On China Amid COVID-19 Lockdown: Telangana IT Minister KT Rama Rao

Telangana IT and Industries Minister KT Rama Rao asked the Centre to expedite Income Tax and GST refunds for pharmaceutical companies as they were experiencing financial burden due to the lockdown. He also said that the pharma industry should reduce its dependence on China for active pharmaceutical ingredients (API or raw material).

In a letter to Union Chemicals and Fertilisers Minister Sadananda Gowda, Rama Rao recommended a slew of measures that the Central Government can implement to provide relief to the industry. “GoI should also consider extending a moratorium on tax payments for the next six months, at least for the MSME sector (sic),” he said. He asked the Centre to release incentives of various schemes as soon as possible.

Rama Rao’s concern and recommendations come in the wake of the pharma sector facing major supply chain and labour issues as a result of the Covid-19 pandemic. Also, more than 80 per cent of the sector consists of small and medium companies. He recommended reducing the GST on APIs to 12 per cent from the current 18 per cent, and requested that bulk drug exporters be allowed to utilise their GST credits. “Government of India (GoI) should allow the exporters to use this accumulated unutilised GST credit towards payment of their GST liability on imports,” he wrote.

Pointing out that the cost of borrowing capital in India was high as compared to many countries such as Vietnam and Bangladesh, the TRS working president said, “The Centre should consider lowering the capital borrowing costs for the pharma industry to offset the after-effects of lockdown on the sector.”

He also stressed the need for the industry to reduce its dependence on China for APIs. “Despite being the third largest in the world by volume, the pharmaceutical industry in India is still reliant on imports of key starting materials. We welcome the GoI’s initiative to set up three bulk drug manufacturing parks,” he said.

“…the cost of production in China compared to India is 30-40 per cent lower, and this can be attributed to multiple factors, including raw material procurement and infrastructure. If we have to increase our competitiveness, we need to build our parks at scale in an integrated fashion and hence, instead of multiple small parks, GoI should consider a mega project,” he said, while requesting the government for its support for Hyderabad’s Pharma City.

Apart from that, he asked Gowda to control the relaxation for essential and non-essential medicines, expedite port-level clearances to ease logistics issues, ensure ease of doing business, maintain pharmaceutical critical reserve inventory for both APIs and formulations, review policy structure and promote pharma exports.

The New Indian Express



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