The Hindu Business Line : Inter-Ministerial turf war may delay pharma policy

The Finance Ministry has said the reduction will only lead to losses in the Government revenues, while the benefit will not be passed on to the consumers.

New Delhi , Sept. 27

A turf war between the Ministry of Finance (MoF) and the Ministry of Chemicals and Petrochemicals (MoCP) may jeopardise the finalisation of the National Pharmaceuticals Policy (NPP) and delay it further.

This difference between the two Ministries is on the proposal to reduce excise duty on drugs from the present 16 per cent to 8 per cent.

Conflicting opinions

The two Ministries have conflicting opinions on whether pricing and taxation issues should be part of the national policy or not.

The Ministry of Chemicals and Petrochemicals is of the view that all the three components of medicine availability — production, consumption and price should be covered by the policy and that taxation comes in to the broader pricing mechanism for cheap medicine availability.

The MoF differs and says that taxation matters should be kept outside the policy.

Earlier, in response to the Ministry of Chemicals and Petrochemicals' proposal to reduce excise duty on drugs, the Finance Ministry had said that it would only lead to losses in the Government revenues, while the benefit would not be passed on to the consumers by the manufacturing companies.

However, at a recent meeting the industry assured the Government that it would pass on the benefits to the consumers.

"Though the entire 8 per cent benefit may not be passed on to the consumers, the companies have said that they would pass on around 5 to 5.5 per cent," sources said.

Even with an assurance that the benefits would be passed on to the consumers, the Finance Ministry is not agreeable to cut the duty, sources said.

Revenues

According to available estimates, the pharma sector has a turnover of approximately Rs 35,000 crore, of which Rs 9,000 crore is produced by small-scale units and is exempt from excise duty. After taking into account the export incentives, the gross excise revenues from the pharma sector stands at around Rs 2,000 crore and the duty reduction would result in a loss of around Rs 1,000 crore.

Meanwhile, the 14-member joint committee with 11 members from the industry and three from the Ministry, set up by the Union Minister of Chemicals and Fertilisers and Steel, Mr Ram Vilas Paswan, to look into the various issues in the pharma policy, would be submitting its report on Saturday.

More Stories on : Pharmaceuticals | Policy | Excise and Customs

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Low pressure in Bay may stay put

3G, wireless broadband auction to fetch Rs 9,500 cr

GSM, CDMA players divided over TRAI's 3G ruling

Lafarge to set up 3-mt plant in Himachal

Mobile Mondays: Entrepreneurs get a voice

Exit spectre haunts MFs

Inter-Ministerial turf war may delay pharma policy

Sonata Soft to buy majority stake in TUI InfoTec

India, Pak banks may open branches across the border

RBI may extend `when issued' trading to new issuances

Late profit booking pares gains; bank stocks rule firm

Basket selling weakens indices

Rama Newsprint: `Momentum' buying seen

Auto components majors put off overseas acquisition plans