Slamming the excise free zone for creating an imbalance in the pharma economy of India, the Gujarat wing of the Indian Drug Manufacturers' Association (IDMA) has, in a letter to the Planning Commission, requested not to increase excise on pharmaceutical products (medicines) in the upcoming budget.
The letter, dated February 22, 2010, brings to light the facts about pharma companies falling under the excise zone and the problems created by the introduction of excise free zones including the difficulties faced by pharma companies in capturing domestic market, the closure of units in excise zone and the fate of those which are on the verge of closure, leading to an increase in unemployment in which more than 70 per cent are women workers.
The four such tax havens in the country are Sikkim, Himachal Pradesh, Jammu & Kashmir and Uttarakhand. IDMA, which represents the small and medium pharma companies of India, had earlier approached the Centre before the forthcoming Union Budget for 2010-11 for abolition of the 4 per cent excise on pharma products, as nearly 60 per cent of the country’s production comes from excise-free zones.
"We are pharmaceutical products manufacturers and our plant is in excise zone. Pharma companies under the excise zone of 23 states were producing more than 70 per cent pharmaceutical products (medicines) before the government declared the excise free zone. While the government is not getting any revenue from the excise free zones, the expenditure increases to develop infrastructure in excise free zone. If the excise is decreased, many companies will decreases the MRP on drugs and pharmaceuticals, thus passing the end benefit to the consumer. Therefore, it is our humble request to our government not to increase excise in pharma products (medicines) further from the existing 4 per cent."
The letter further states that if the government raises excise from 4 per cent, pharma companies under the excise zone will have to cut their production as their business will be transferred to the excise free zone.
"There will be widespread unemployment as pharma companies of 23 states will go into dying stage if the excise is further raised from 4 per cent in the budget. The cost of medicines will increase again and educated pharmacist of 23 excise zone will loose their confidence in the government. We would also kindly draw your attention towards the increase in self-financed pharmaceutical colleges across the country, which will result in a large number of pharmaceutical students graduating in the near future. To give employment to such technical people, the drug and pharmaceutical industry should be flourished in all parts of India, which is only possible if the industry stands in competition. From all these facts, we strongly insist the government not to increase excise duty in pharmaceutical products (medicines) and save the 23 excise zone pharma industries," the letter said.