Tax holiday withdrawal haunts pharma in Himachal

Drug companies in Himachal Pradesh are worried the Centre may any day withdraw tax benefits, around three years ahead of the tax holiday period.

Their apprehension is based on media reports from Delhi, which said the Prime Minister's Office was actively considering withdrawing this excise package from drug companies doing loan licence or third party manufacturing in Himachal and Uttaranchal.

Members of the Himachal Drug Manufacturers Association(HDMA) on Thursday appealed to the state government to take up this issue with the Centre immediately. It also appealed to the Himachal government to continue tax holiday benefits till 2012

"If the government goes ahead with the withdrawal of this excise package more than 350 pharmaceutical formulation units and around 100 ancillary units in the state will close down or move out as most of them are carrying out contract manufacturing or loan licences," said Rakesh Arora, president of HDMA, here today.

"Around 400 pharma units are currently operating in the state due to the excise package involving an investment of Rs 4,500 crore, of which 80 per cent are small scale units," Arora said.

"It would have wider implications as over Rs 3,000 crore borrowed from banks and national financial institutions funds will be at stake if the government goes ahead with this move.Besides some 200,000 people will lose their jobs," he said.

After the excise package was announced to attract industry to the hill state in early 2003 over 400 units have so far come into operation in Himachal.The tax holiday is to last till 2010.

There has been a rush to avail the tax incentives by pharma units from all over the country.Himachal and Uttaranchal have emerged as the pharma hub of India with 70 per cent of the drug units currently located in these twin hill states.