Pharma units' investment plans take a hit
`Exclusion of Goa for tax holiday will affect its economy'`Industrialisation will take a beating'
PANAJI: The Goa Cabinet on Tuesday expressed opposition to the recent extension of tax incentives to special category (hilly) States by the Centre as it would have a devastating effect on the industrialisation of this tiny State.
"It is not fair, it is a denial of a level playing field,'' protested Chief Minister Pratapsingh Rane at his post-Cabinet press briefing here on Tuesday.
He recalled that Union Finance Minister P. Chidambaram had promised to Goan industry during his visit to the State last year that the incentives available in other smaller States would have a sunset clause only up to March 2007. "The Goa Government and industry had not pressed for the extension of the tax holiday available to the State based on this promise,'' the Chief Minister said.
Mr. Rane argued that the States that had been granted the extension were all `C' class States like Goa and to exclude only Goa was not only unfair but would cause downward slide in the economic progress of the State.
Taking a serious note of the issue, the Cabinet has decided that the issue will be taken up with Mr. Chidambaram,
Chief Secretary J. P. Singh pointed out that the State's pharmaceutical sector had been the worst hit by the extension of excise exemption to special category States.
Pharma giants like Reddy's Laboratories and Ranbaxy were among those which had either withdrawn their plans for investment or scuttled plans for expansion in the State's pharma hub at Verna Industrial Estate.
Moreover, smaller pharma units, which survived by manufacturing products of multinational and big domestic pharma companies on the loan-licence or contract manufacturing basis, were facing the survival problem as many big pharma giants, which had entered the State during the income-tax and sales tax holiday regime were looking to States offering excise exemption, since excise happened to be the big component of the pharma product costs.
The State Cabinet was compelled to take note of industry's concern following a letter addressed to the Chief Minister by the President of the Goa Chamber of Commerce and Industry (GCCI), Nitin Kuncoliekar.