Chandigarh, January 9
The Union Government’s endeavour to bring down drug prices is sounding the death-knell of pharmaceutical units in Punjab, Haryana and Chandigarh.
It has now decided to levy excise duty on 65 per cent of the maximum retail price (MRP) of drugs. Earlier, excise duty was levied on ex-factory price.
“While we will be forced to increase our ex-factory prices by about 29 per cent to meet the new excise duty requirements, we will be nowhere to compete with pharmaceutical units in neighbouring Himachal Pradesh, Uttaranchal and Kashmir, where there is exemption on payment of excise duty,” says Mr Jagdeep Singh, president, Drug Manufacturers’ Association.
There are 300 pharmaceutical units in Punjab, Haryana and Chandigarh which will be adversely affected by the new excise regulations.
We appreciate the government’s concern for reducing the drug prices as major players have been charging exorbitant rates for drugs which can be made available at 25 per cent of the existing prices.
“But smaller units have only a nominal profit margin on which they thrive. And once that nominal margin of profit also goes in excise duty, we all will be doomed,” rues Mr Jagdeep Singh.
“The Central Government must provide level playing field to all units. On the eve of the last Assembly elections in some states, the Union Government had announced a tax holiday for new hill states. Jammu & Kashmir was included in the list because of terrorism.
“Punjab, too, witnessed terrorism for more than two decades but no such tax holiday was provided to its industry. How can a small player with a unit of less than Rs 1 crore compete with a similar unit in Himachal or Uttaranchal, which has 100 per cent exemption from central excise duty, 100 per cent income tax exemption, sales tax deferment for five years and other benefits,” asks Mr Jagdeep Singh.
Some units have already moved from plains to hill states for better opportunities. Others may be go into production from April 1 this year to avail themselves of benefits for full one year.
Decrying the lopsided policies, Mr Jagdeep Singh said instead of encouraging industrialisation, appeasement policies were only fomenting flight of industry from one state to another.
Instead of supplementing infrastructure, including roads, power supply and healthcare facilities, it was trying to benefit one state at the cost of another.
