Telangana Industries Minister K.T. Rama Rao has urged the Centre to expedite Income Tax and Goods and Services Tax (GST) refunds to pharmaceutical companies as a measure to ease the financial burden they are experiencing on account of challenges triggered by COVID-19.
Making a set of recommendations, in a letter to Union Minister for Chemicals and Fertilizers D.V. Sadananda Gowda on Wednesday, Mr. Rao said though manufacturing plants around the world were limping to resume operations fully, supply chain issues continued to remain and the pharmaceutical industry is experiencing exorbitant increase in input cost of manufacturing.
Drug prices
“In order to provide interim relief to pharma industry, government of India should relax the price control norms, wherever applicable and allow additional 10% increase in prices above the existing allowance,” he said in one of the recommendations titled ‘Price control relaxation for essential and non-essential medicines.’
“GoI should also consider extending a moratorium on tax payments for the next six months, at least for the MSMEs, to further ease the financial stress,” Mr. Rao said. More than 80% of the firms in the industry are small and medium enterprises. Mr. Rao also wanted the Centre to expedite clearance of incentives under export promotion schemes, provide export incentives and consider lowering the cost of capital for the industry. He said the industry has begun to experience financial burden due to reduced production capacity, shortage of labour, price pressure caused by supply chain issues and maintaining a large skilled workforce on payrolls among the many other deeper issues as a result of COVID-19.
Telangana is the largest pharmaceutical hub in the country contributing over 35% of the national production and home to more than 800 Life Sciences companies employing about 1,20,000 people. Elaborating on the financial stress faced by the industry, Mr.Rao said the cost of operations has increased tremendously owing to the increased cost of raw materials, inputs, logistics, reduced capacities and interim measures to comply with the lockdown guidelines. He wanted the Centre to reduce GST on active pharmaceutical ingredients (APIs) to 12% from 18%.
Other aspects he highlighted in the letter, included the need for measures to expedite cargo clearance at ports, particularly imported raw material; formation of a pharmaceutical based task force to improve ease of doing business levels; maintaining at least three month inventory of both APIs and Formulations; and reduce dependence on China for APIs.
Seeking “full support” of the Department of Pharmaceuticals for Hyderabad Pharma City, being developed by Telangana government on 19,333 acres, Mr.Rao said the Centre should promote this as the de-facto location for pharmaceutical manufacturing and R&D in India.
