The biotechnology industry is seeking tax incentives for patented products and clinical research and development as well as Customs duty exemption on imported R&D equipment and consumables in this year's Budget.

“The success of the biotechnology sector will depend on a low cost base for innovation, a strategy being pursued by other nations, including China. It is imperative to evolve fiscal and regulatory policies that alleviate capital-intensive research and manufacturing, long gestation period for product commercialisation, and investment in patenting and technology licensing,” Kiran Mazumdar Shaw, chairperson of CII's biotechnology committee, said.

According to Shaw, biotechnology has the potential of generating revenue to the tune of Rs 25,000 crore (Rs 250 billion).

Fiscal incentives by way of import duty waivers, tax deductible expenses as well as tax holidays, will be outweighed by the revenue realised through products, services and licensing opportunities.

According to the chamber, Customs duty exemption has been sought for research-enabling instrumentation and equipment, including PCR machines, DNA sequencers, oligonucleotide and peptide synthesisers, gene array technologies, specialised laboratory fermenters and protein purification work stations among others.

Academic institutions (both private and public) engaged in biotechnology training and research programmes as well as biotechnology companies located in recognised technology parks and special economic zones should be permitted to avail of this duty exemption, it has said.

According to the CII, a weighted average tax deduction to the extent of 200 per cent of the costs incurred in international patenting should be permitted, which will help offset part of the patent and registration costs.

It has sought similar tax incentives for costs involved in clinical development and field trials.

Other recommendations include the continuation of exemption under Section 801B for R&D companies.

The industry body has also recommended duty exemption on imported capital goods for biotechnology projects like microbial and animal cell culture bio-reactors, chromatographic systems, columns and matrices for protein purification, cell separation equipment, automation and quality control equipment among others.

Also, the import of capital goods for biotechnology projects involving manufacture of life-saving drugs may also be exempted from payment of Customs duty, it has added.

The chamber has further recommended the continuation of the scheme that exempts 100 per cent export-oriented units from corporate income tax till 2010.