'Non-tariff barriers hinder pharma trade with China'

India's exports of pharmaceuticals to China could increase, if non-tariff barriers like procedural, legal and cultural ones that hinder market access to China are removed, the Federation of Indian Chambers of Commerce and Industry (Ficci) has said. Ficci has recommended that the various non-tariff barriers should be identified and addressed.

Easier trade financing and greater cooperation between the exim banks of the two countries would also improve trade between them, a Ficci release said.

India's exports of drugs, pharmaceuticals and fine chemicals to China have grown at just 3 per cent year-on-year in the last three years. India's exports to China have grown from $94 million in 2002-03 to $109 million in 2004-05. This accounts for barely 2 per cent of India's exports of drugs and pharmaceuticals to the world.

"This indicates that the high-performing Indian pharmaceutical sector has not found the environment conducive for achieving similar growth with China," the release said.

In contrast, exports to markets such as the US, Europe, Africa and South America have grown by 19 per cent while the world average growth rate for this sector is about 6 per cent.

The non-tariff barriers identified by Ficci in increasing pharmaceutical exports to China include procedures for product and company registration. Procuring import drug licenses are expensive and time consuming.

It may take 18 months to three years to procure an import drug licence. These licences and registration are essential for exporting goods even to factories owned by the companies located in China. This is a considerable deterrent for Indian entrepreneurs to initiate exports to China.

Long Customs procedures, re-inspections and discriminatory packaging regulations that even specify the colour used for packaging result in delays and higher costs.

Also, the banking procedures for foreign players, particularly for remittance of foreign exchange, are tedious. Even sight payments are remitted after a minimum of 30 to 45 days due to the foreign exchange declaration system of Chinese banks.