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June 27, 2001
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Money > Business Headlines > Report June 27, 2001 |
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Duty exemption on life saving drugs may goMamata Singh The finance ministry is considering a proposal to withdraw customs duty exemptions on life saving drugs. The exemptions will be provided only if importers are willing to subject the drugs to price control and pass on the benefit of duty exemption to consumers. The proposal, moved by the department of chemicals and fertilisers is based on the contention that the benefit of this exemption is currently not passed on to consumers. Also, the loss to the exchequer on account of these cumulated exemptions is estimated at over Rs 2 billion each year. The department has written to the finance ministry stating that the importers of these medicines do not have to sell them at a declared price. Even in cases where the drug is covered by the Drug Price Control Order, there is no way in which the government can be sure that the benefit of the exemption is passed on to the consumer because of the wide misuse of transfer pricing by pharmaceutical companies and importers. Currently, 254 drugs and formulations are exempt from customs duty on the ground that these are "life saving" drugs. However, the DC&F has contended that it is very difficult to identify a "life saving" drug and the list of such drugs has grown in an ad hoc manner over time. Now this list includes things like blood group sera to burn therapy dressings soaked in gel. The DC&F has recommended that the government should withdraw the customs duty exemption provided to importers of life saving drugs from any prospective date and then direct all persons wanting duty exemption beyond this date to get the price of the product (if it is not already done) fixed by the National Pharmaceutical Pricing Authority, the nodal agency to ensure implementation of the DPCO in the country. The NPPA can then follow a summary procedure for determination of tax exempt price of the imported drug once. No imports will be allowed after the prescribed date, till the price is fixed by the NPPA, the DC&F has recommended. The health ministry has also given it's approval to the proposal and it has now been put up to the Revenue department in the Finance Ministry for consideration. Powered by YOU MAY ALSO WANT TO READ:
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