Hyderabad, Feb. 28
When we come to specifics of the pharma industry, we find there is very little in it for us.
Reduction in peak custom duties from 15 per cent to 12.5 per cent will bring down imported raw material costs, which is a positive sign for all! The FBT on free samples has been removed which is good as it was irrational to tax free samples given to doctors, which were in turn passed on to needy patients. However, it is too small a change to make any great impact.
There was no mention of extension of the weighted deduction on R&D. Last year's Budget announced that it was applicable till 2007 and we hope this good practice will continue after 2007 too.
With the patent regime on in India, it is time the Government encouraged innovation and supported the industry by announcing grants for R&D. In the past, only announcements have been made but no action has ever happened on the special fund for R&D. We hoped for incentives to set up R&D centres in India. This would have created numerous spin-off benefits to help create a base for innovation in India. But Budget 2006 has been disappointingly silent on this aspect.