Pharma sector demands lifting of MAT on SEZs

Indian Pharmaceutical Alliance (IPA) expects signals from the Budget on revival of the India growth story.  IPA expects measures from the government that will incentivize innovation.

Currently, the spend on R&D as a percentage of GDP is just 0.9% and India needs an ecosystem which nurtures incubation and encourages the private sector to invest into research.

There are some tax incentives that are already available, such as the 200% weighted deduction on R&D available and this could be raised to 250%, apart from expanding its coverage. Pharma companies also need to undertake bioequivalence studies and conduct clinical trials abroad apart from doing patent filings abroad, but these are not eligible for this deduction.

On the bulk drug industry, which is facing some challenges from China in select segments, IPA demands creating industry clusters where basic infrastructure is created and common utilities such as power are provided by the government at a competitive price, would go a long way to improve the cost competitiveness of Indian pharma in the bulk drug space.

This may be the best way to reduce dependence on China in the supply of bulk drugs for select essential drugs, such as Penicillin-based antibiotics where India is totally depended on imports from China.

The pharma industry would be keenly watching if health is really a priority for the country and what measures the government wants to take to increase public spend on health. With just 1.2% of the GDP the Pharma industry expects the government to increase the public spend to 2.5% of the GDP in the next five years.

Industry body, IPA expects concrete signals in the form of ways to improve reach of health-care, improving capabilities in terms of skill availability (doctors, nurses and health workers) and the public-private partnerships measures. There is a need to relook at the MAT (minimum alternate tax) imposed on the Special Economic Zones (SEZs), with perhaps ideally lifting the 18.5% MAT for pharma SEZs.

Powered by

Please click here for the Complete Coverage of Budget 2014 -15