Domestic drug makers are pitching for tax exemptions in the coming Budget to boost their research and development (R&D) activities. The pre-Budget memoranda of the Indian Drug Manufacturers Association (Idma) and the Federation of Indian Chambers of Commerce and Industry (Ficci) have said more incentives are needed to spur drug research. “Considering the long-term benefits of R&D to the economy at large,” said Idma, all goods subject to central excise and used for R&D purposes “should be exempted”.
Officials of the Ministry of Chemicals and Fertilisers said the recommendations of the industry associations were being considered seriously.
Ficci highlighted the need for investment in drug discovery research and development of non-infringing (of patents) processes. “Due to the introduction of the product patent regime, the industry in India is at a critical juncture. So, to promote R&D, the rate of weighted deduction should be raised from 150 per cent to 200 per cent. Filing an application for a patent outside India should also be considered for weighted deduction to encourage companies to undertake R&D in a major way,” Ficci said.
Currently, the weighted deduction benefit for R&D is available till March 31, 2012, for all companies that were approved as scientific research organisations on or before March 31, 2007. Ficci wants this cut-off date also to be extended to 2012, to make new companies eligible for the tax holiday.
Both associations also wanted the excise duty to be levied on 55 per cent of product value rather than the current 65 per cent, to factor in high research expenses.
Tax exemption to imported life saving medicines, financial help for upgrading manufacturing and research capabilities and subsidies for filing patent applications in foreign countries were some other demands made by the industry.