FICCI seeks tax breaks for pharma sector

In order to make Indian pharma sector globally competitive, industry body FICCI today suggested increasing the R&D fund allocation by government to Rs 2000 crore, liberalisation of price control regime and income tax exemption on clinical trials.

The FICCI report on 'Competitiveness of the Indian Pharmaceutical Industry in the New Product Patent Regime' said that the regulatory framework should be designed to encourage domestic industry to invest in research and development.

Suggesting an eight-point agenda for action to boost the competitiveness of the pharma industry and cash in on the strengths and opportunities enjoyed by the industry, the report said "the allocation of Rs 150 crore by the government for R&D should be augmented to Rs 2000 crore."

It also stressed on the need to liberalise the Drug Price Control Order, which "puts unrealistic ceilings on product prices and profitability and prevents pharma companies from generating investible surpluses".

The report said lowering of tariff protection and the new MRP-based excise duty regime threatened the existence of many small scale pharma units, especially in Andhra Pradesh and Maharashtra, that were involved in contract manufacturing for the larger players.

FICCI also sought tax holidays to encourage setting up of USFDA-compliant plants for exploiting the opportunity arising out of patented drugs and take up marketing of generics in developed countries like the USA.

The report also noted major constraints plaguing the sector like low R&D spend, weak linkages between industry and academia, low medical spend, spurious drugs and shortage of medicines with psychotropic substances.