Chemicals ministry moots excise exemption to 354 NLEM drugs
Ramesh Shankar, Mumbai

Much of the sheen in running pharmaceutical units in the tax holiday destinations like Baddi in Himachal Prdesh and Uttarakhand will lose in the near future as the Union Chemicals ministry is working on a proposal to announce the 354 NLEM (national list of essential medicines) drugs as life-saving drugs and will also exempt them from excise duty.

Union Chemicals Minister Ramvilas Paswan is waiting for the budget proposals by P Chidambaram on February 29. If the Finance Minister refuses to concede anything substantial to the pharma industry, Paswan will take the proposal to Cabinet Committee on Economic Affairs (CCEA) which is headed by none other than the Prime Minister himself, sources said.

The chemicals ministry has already given final shape to the proposal and it is waiting for the seal of approval of the minister. If the Finance Minister earmarks something substantial for the pharma industry which in turn will come in handy for the industry to reduce the prices of essential medicines, the minister will not take things further forward, sources added.

The proposal will be a big blow to those who have set up pharma units in the excise-free zones as they will lose the tax advantage. These units have been enjoying tax waiver of 16 per cent excise duty since 2002 when the central government announced a slew of tax holiday schemes to encourage the industries to establish their businesses in these backward states which they would not have done otherwise.

According to industry estimates, the NLEM drugs, prepared by the Union Health Ministry in 2003 on the directive of Supreme Court, constitute a substantial percentage of total drugs manufactured in the country. Though estimates vary, there is no dispute that the list covers a substantial percentage of the total drugs in the country. A large number of these products are manufactured in the excise-free zones to take the tax benefit.

However, the proposal will prove to be a big solace to the small industries because they will get a semblance of level playing field by the government's action.

Source: www.pharmabiz.com
25th February 2008

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