P.T. Jyothi Datta

Mumbai, Nov 11

THERE may be some cheer for small-scale drug manufacturers trying to upgrade production facilities. The Centre plans to institute a Technology Upgradation Fund Scheme (TUFS) for the pharma sector, similar to the one in the textile sector.

The proposed scheme will help small-scale drug manufacturers struggling to meet the Schedule M deadline that made Good Manufacturing Practices (GMP) mandatory from July, a senior official with the Chemicals and Fertilisers (C&F) Ministry told Business Line.

SIDBI will be the nodal agency operating the scheme, which is expected to be rolled out in about three months, the official said.

As part of the scheme, the Government will subsidise about five per cent of the interest rate on the loan taken by a small-scale drug manufacturer, the official with the nodal Ministry said. At present small-scale manufacturers pay 10-11 per cent interest, he added.

Several small-scale drug manufacturers had their back against the wall with the Schedule M norms coming to effect this year. Despite repeated extensions, some manufacturers were unable to meet the norms.

Forcing defaulters to close down would have affected the employees of these units, the official said. It was against this backdrop that the C&F Ministry planned to institute the TUF scheme, specifically to help small-scale drug units meet the GMP norms, the official added.

SIDBI could further tie up with other banks to increase the coverage of the scheme, he added.

The official clarified that the proposed TUF scheme for small-scale drug manufacturers was in addition to existing schemes for small and medium enterprises across different sectors.

Small-scale drug companies felt an excise-duty related directive from the Centre earlier this year had further queered the pitch against them.

They felt they were at a disadvantage, as big pharma companies leveraged the benefit of tax havens such as Himachal Pradesh or Jammu, industry representatives said.

The Ministry official said that about 2,000 small-scale drug units were expected to avail themselves of the scheme and, for starters, the Ministry was looking at loans of up to Rs 35 lakh.

Eligibility criteria would be outlined and loans given to small drug units meeting these requirements, he said.

(This article was published in the Business Line print edition dated November 12, 2005)
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