No end to tussle on sops to contract drug makers

The revenue department is dragging its feet over a recommendation of the

Economic Advisory Council to discontinue tax incentives enjoyed by contract manufacturers of medicines in excise-free zones.

The recommendation was approved by the Prime Minister's Office in November last year.

''The revenue department has thrice sought the definition of contract manufacturing and loan licensing from the Department of Chemicals and Fertilisers in the past six months. We fail to understand why matters are being delayed,'' complained Jagdip Singh, president of the Punjab Drug Manufacturers Association which represents units in excisable zones.

But officials in the revenue and chemicals departments have refused to comment on the matter, saying that they were still studying the options available.

Officials in the revenue department have, however, written to their counterparts in the chemicals department to provide the exact definition of manufacture under loan license, as well as for contract manufacture, to enable the department to make suitable changes in the notification.

The officials said the notification to restrict tax benefits to companies producing drugs for their own purpose got delayed after the contract manufacturers in states with tax exemptions countered the proposal.

The contract manufacturers argued that if small and medium manufacturers were suffering on account of the migration of business to excise-free zones, a reversal would be disastrous for contract manufacturers that were operating in excise-free zones.

Both groups have been mustering political support from their respective states to put pressure to amend the notification or delay the process.