Lockdown | Pharma raw material, goods worth $1 billion stuck at ports

Pharmexcil appeals to RBI for relaxations in non-fund based limit terms.

Pharmaceutical raw materials and finished goods worth over $1 billion are stuck at the ports on account of transportation and manpower constraints, Pharmaceuticals Export Promotion Council of India (Pharmexcil) has said.

Consequently this disruption, on account of COVID-19, has led to the units in the pharmaceutical industry unable to operate beyond at best 25-30% of their normal operational manufacturing capacity. Such a situation prevails despite the pharmaceutical industry classified as commodities and services.

Pharmexcil chairman Dinesh Dua cited this in an appealing to the Reserve Bank of India (RBI) for relaxation in certain terms of non-fund based limit.

“Our member companies have approached us to request you to immediately consider at least an extension of six months for due payments against non fund limits predominantly provided through Letter of Credit (LC) for making the payments to the bankers,” he said in a letter to the RBI Governor, copies of which were marked to the Prime Minister and a few Union Ministers and senior officials concerned. Pharmexcil has around 3,500 member companies who generate value turnover of $50 billion – $25 billion each for domestic and exports.

March witnessed very serious disruption both in terms of manufacturing as well as supply chain resulting in financial setback to the entire industry leading to inability of practically all pharmaceutical firms to continue to produce and make available highly cost effective and quality pharmaceutical products both in India as well as overseas. He said stressing that such a stimulus from RBI is “very urgently needed on account of [the] huge disruption” created worldover on account of COVID-19.

“We are flooded with calls asking for financial relief particularly in terms of non fund limits as 10% of turnover as additional COVID working capital limits as sanctioned as a part of RBI stimulus package is grossly insufficient on account of this mega disruption,” he said.

The constraints for the industry will eventually lead to acute shortage of lifesavings pharmaceuticals both in India and abroad, including in the U.S. and European Union.

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Printable version | May 26, 2020 7:01:32 PM |

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