Business

Pharmexcil wants RBI to ease non-fund limits

Srinagar: A man talks to his relatives inside a medical shop, in Srinagar, Monday, Oct. 14, 2019. Mobile phone services on postpaid connections were restored in Kashmir after remaining suspended for 70 days following abrogation of Article 370 and bifurcation of Jammu and Kashmir into two union territories.(PTI Photo/S. Irfan)(PTI10_14_2019_000104A)

Srinagar: A man talks to his relatives inside a medical shop, in Srinagar, Monday, Oct. 14, 2019. Mobile phone services on postpaid connections were restored in Kashmir after remaining suspended for 70 days following abrogation of Article 370 and bifurcation of Jammu and Kashmir into two union territories.(PTI Photo/S. Irfan)(PTI10_14_2019_000104A)   | Photo Credit: S. Irfan

$1 bn worth of materials stuck at ports

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

Consequently, the COVID-19-led disruption has led to pharmaceutical units unable to operate beyond 25-30% of their normal operational manufacturing capacity. The situation comes despite the pharmaceutical industry classified as commodities and services.

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

“Our member-companies 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 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, a few Union Ministers and senior officials concerned. Pharmexcil has about 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 a financial setback for 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 the RBI is “very urgently needed on account of [the] huge disruption” created the world over on account of COVID-19.

“We are flooded with calls asking for financial relief, particularly in terms of non-fund limits, as 10% of the turnover as additional COVID working capital limit, 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 life-saving pharmaceuticals both in India and abroad, including in the U.S. and European Union.

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Printable version | Jul 5, 2020 6:22:14 PM | https://www.thehindu.com/business/pharmexcil-wants-rbi-to-ease-non-fund-limits/article31274043.ece

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