Considering the fact that healthcare has been a focus area for the government, the pharmaceutical industry feels the Union Budget 2013-14 should address the issue of high taxes and duties on drugs to ensure affordable medicines for all.

In its pre-budget memorandum, the Organisation of Pharmaceutical Producers of India (OPPI) said it was imperative that critical life saving drugs were made available to the patients at reduced prices.

Hence, all life saving drugs (including medical devices) should be exempted from customs duty on import into India, it added.

Excise duty

The central excise duty on drugs is 6 per cent, and value added tax is 4-5 per cent. The customs duty on formulations is 10 per cent (other than specified drugs, life saving drugs, vaccines and bulk drugs where it is 5 per cent).

OPPI has recommended that the customs duty be rationalised to 5 per cent, and that customs duty for health supplements be reduced to 10 per cent from 30 per cent and the additional customs duty of 12 per cent be reduced to 10 per cent.

Manish Doshi, President, India Drug Manufacturers’ Association (IDMA) and Managing Director, Umedica Labs, told The Hindu , that “the taxes and duties across the value chain must be brought down. The government has been working to keep medicine prices low and affordable but considering the demand, the rates must be rationalised.”

Some therapeutic categories such as anti-cancer or transplant drugs could cost several thousand rupees a month, and, according to Mr. Doshi, “the government must ensure that the patient gets the best at affordable rates.’’

R&D needs a boost

In the present form, the only tax benefit available for research and development (R&D) activities is in the form of weighted deduction for in-house R&D.

It is felt that R&D activity along with contract manufacturing could go a long way to help the Indian pharma sector grow. D. G. Shah, Secretary General, Indian Pharmaceutical Alliance (IPA), felt that pharma R&D was different from R&D in all other sectors. “It takes a minimum of 10-12 years to arrive at an outcome. It requires sustained effort and funding. Pharma R&D however, continues to be treated on a par with R&D in sectors such as automobiles or information technology. Pharma units engaged in R&D should get incentives to give a boost to this activity,” he said