FREE FOR ALL IN HIMACHAL
P A Francis
Editorial : www.pharmabiz.com

Almost 80 per cent of 300 odd pharmaceutical units which have been granted provisional registration to set up manufacturing plants during
the last two years in Himachal Pradesh are located in Baddi and its surrounding areas. The village, Baddi, is located on the border of
Haryana and Himachal. As reported by Pharmabiz, more than 120 units are already in operation in Baddi region. Many more are expected to commence
the production in the next few months in the region as the current deadline to avail of the excise exemption is to expire by the end of
March 2007. The sudden rush of drug units and consequent shifting of a major part of country's pharmaceutical production to Baddi region in
such a short time is unprecedented in the history of Indian drug industry. Probably, this kind of industry shift is not anticipated by
the Centre when it granted the excise free status to Himachal in 2003.

Now, the state has emerged not only as a major pharmaceutical production centre but also as a location for price violation and overcharging of
drugs. In other words, what the Central government has provided to pharmaceutical units in Himachal and two other states namely Uttaranchal
and Jammu & Kashmir is a facility to fleece the patients and enrich the pharmaceutical trade. This is abundantly clear if one looks at the large
scale violation of ceiling prices and overcharging of other essential drugs indulged in by these units. NIPER has confirmed the price
violations taking place in excise free states and has reported to the Union ministry of chemicals and fertilisers sometime ago. With no
surveillance on drug prices by NPPA and state drug control administration, the pharmaceutical units in Baddi are having a
celebration time. The units in excise free zones, in the process, are also killing a large number of small drug units elsewhere in the country
with their ability to offer huge margins to the retail trade. Some of the units migrated to Baddi recently have just one objective: Make the
maximum possible returns on their investments within the ten years of tax holiday and get out of the place. Is this the Centre wanted by
foregoing substantial amounts of direct and indirect taxes by declaring these states excise and income tax free for ten years? One can imagine
what could be the annual revenue loss to the government once all the registered units start the production in full swing in these excise free
states. The matter has been brought to the notice of the Union finance ministry by the affected units some weeks ago but nothing has moved yet.
Creation of tax holiday states by the Centre has actually created a disparity amongst units in industry segments and in particular in
pharmaceutical industry. The MRP based excise levy on pharmaceuticals introduced on January 7, 2005 has aggravated this disparity further.

Courtesy : www.pharmabiz.com
7.6.2006

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