Exemption from excise duty hike a big relief.
Pharmaceutical companies heaved a sigh of relief as the finance minister decided to keep excise duty on drugs, pharmaceuticals and medical equipment unchanged at 4 per cent, while raising it to 8 per cent for many other items.
Giving mini booster doses to the industry, FM also announced a reduction in customs duty from 10 per cent to 5 per cent on influenza vaccine and nine specified life-saving drugs used for the treatments of breast cancer, hepatitis-B and rheumatic arthritis among others, and on the bulk drugs used in their manufacture. The minister also fully exempted these drugs from excise duty and countervailing duty. Additionally, the drug companies are expected to benefit from the government’s allocation of Rs 2,057 crore over and above the Rs 12,070 crore provided in the interim Budget for the National Rural Health Mission (NRHM).
Ramesh Swaminathan, chief financial officer of Lupin said the benefits of projects such as NRHM would reach the public only through proper and correct utilisation of the allotted funds.
Abolition of the fringe benefit tax (FBT) will also benefit the pharmaceutical and biotech companies, as currently drug firms spend about 5 per cent of their marketing expenses — which constitute about 15 per cent of their turnover — on FBT.
However, the industry was expecting more research and development (R&D) sops such as increase in weighted deduction on expenditure incurred on in-house R&Dand better incentives for exports.
“The need is to raise healthcare spending from the current 1 per cent to at least 3 per cent of the GDP to boost primary healthcare and various interventions with public private partnerships,” said Kewal Handa, MD, Pfizer India.
T S Jaishankar, chairman, Confederation of Indian Pharmaceutical Industries (CIPI) said the Budget failed to offer sops for the small and medium sector drug companies.
