| The measures The Budget has exempted clinical trial of new drugs from service tax. It has extended the concessional 5 per cent customs duty on import of research instruments, so far confined to public sector institutes, to all research institutes registered with the Directorate of Scientific and Industrial Research. |
| It has also reduced the customs duty on 15 specified machinery for the pharmaceutical and biotech sectors from 7.5 per cent to 5 per cent. Besides, the Budget has allowed 150 per cent weighted average tax deduction for R&D expenses, slated to end on March 31 this year, for another five years. |
| The context The research-driven drug companies had been demanding the extension of the tax deduction on R&D expenses till 2017. |
| Other major demands of the industry were increase in abatement on maximum retail price from 40 per cent to 45 per cent and reduction in excise from 16 to 8 per cent. The sector had been left largely untouched by the last Budget. |
| The impact Most pharmaceutical companies expressed happiness with the extension of the R&D incentive. "This will enable vital research work to continue within the country in a stable environment and will help deliver a sustainable India advantage in this sunrise sector," said Ranbaxy CEO Malvinder Mohan Singh. |
| Added Nicholas Piramal India chairman Ajay Piramal: "The budget has done justice to the R&D-driven companies." |
| Dr Reddy's Laboratories' managing director Satish Reddy, while welcome the continued incentive to R&D said, said: "There is nothing in terms of bold moves that will change the trajectory of growth of the industry or decisively impact public health." |
| "We were hoping there would be significant incentives to stimulate R&D in India. However, while we expected more, we are glad that the tax incentive to R&D will continue for another five years." said Glen saldanha, managing director and chief executive officer, Glenmark Pharma. |
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