Pharma firms moving out of Maharashta, Gujarat

Over 50 pharmaceutical companies have scaled down operations in Maharashtra and Gujarat, and are moving out to states like Uttaranchal and Himachal Pradesh.

"About 50 companies including Torrent, Sun Pharma, Indoco and Alchem are moving to Uttaranchal, Himachal Pradesh and Jammu & Kashmir to avail of the zero per cent excise duty. More companies are expected to follow suit," officials of Indian Drug Manufacturing Association (IDMA) said.

Around 70% of the pharma companies are located in Maharashtra and Gujarat, which would be hit most by the exodus, they said.

About 150 companies have already set up shop in Baddi in Himachal and 50 in Dehradun, they added. "The biggest losers would be small manufacturers who are sub-contracted by the big players," officials said.

The government should revert to the old structure of levying duty on manufacturing prices rather than MRP after which there would not be much incentive for the companies to move to other states offering tax incentives, IDMA officials said.

Maharashtra alone has a turnover of about Rs 14,000 crore from the sector, they said, and added that there would be a lot of unemployment due to the flight of industries.

Swati Piramal, director of Nicholas Piramal, said the duty was now charged on a higher base of MRP than the manufacturing price, which led to an overall impact of 37%.

She said the governments of Maharashtra and Gujarat should advocate against the duty hike since both states stood to lose revenue.