Chandigarh, February 20
The multi-crore small and marginal drug industry employing about 50,000 skilled and unskilled workers in Punjab, is in a quandary. Unless the January 7 notification issued by the Union Finance Ministry is withdrawn, all 300 units in the state face closure. The critical situation facing the industry was reviewed at a meeting of the Punjab Drug Manufactures at Ludhiana today.
As an immediate measure, they want entry tax to be levied on drugs brought from states enjoying tax holiday and other benefits.
Mr Jagjit Singh of Mohali, who was elected President of the new body, appealed to the Chief Minister and members of Parliament from the State to take up the matter with the Prime Minister for their survival.
“Thousands of crores invested in small drug units would go down the drain causing huge unemployment and price rise too. It may be a mere coincidence that the timing of the Good Manufacturing Practices (GMP) notification and excise notification coincide by accident or design, because small units still expect more to come their way. If small units perish prices of common medicines, will rise manifold,” said Mr Jagjit Singh.
About 8,000 small-scale drug units produce about 50 per cent of the total drugs in the country, and almost the entire health system of rural India is dependent on them for low cost medicines. Since the Schedule M of the Drugs Act (Good Manufacturing Practices) has been amended and compliance made mandatory till June 30 this year for even the smallest unit, quality aspect is taken care of even at the production stage.
“Huge investment has been made by each small drug unit to comply. Factories were virtually broken down and remodeled for the second time in 15 years as the last GMP was notified in 1989. Another notification levying excise duty on 35 per cent abatement on MRP as generally done by large units, in lieu of ex-factory price earlier has caused disadvantage and disparity of about 30 per cent to drug units of plains — Punjab vis-a-vis tax exempt states enjoying tax holiday like Himachal, Uttaranchal and J&K, where enormous manufacturing capacities are being created,” adds Mr Singh.
“The notification is illogical, unfair and violates basic right to equality. In free INdia, government cannot promote one area at the cost of another,” Mr Jagjit Singh said.
“Punjab has about 300 small units. Most units are on the verge of closure. The drug production has dropped drastically. And many units are migrating to the hills instead of perishing here, to enjoy tax exemption,” reveals Mr Jagjit Singh.
The State Government has responded to the association’s distress call as the Chief Minister has written to Union Finance Minister that measures need to be adopted to put a similar tax on units located in the hill states so that the disadvantage already being faced by units in Punjab does not increase to unreasonable limits.
“The only option for the Punjab Government to safeguard its units is to levy entry tax, implementation of which is feasible. We also request that Punjab Government procure medicines from its own units at price preference like Himachal,” said Mr Jagjit Singh.
