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 200 crore 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.
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Even in cases where the drug is covered by the Drug Price Control Order (DPCO), 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