Investment for growth is the most important issue the forthcoming Budget needs to address.

The Government needs to remove regulatory barriers through deemed and automatic approvals.

And, to prevent discretionary approvals, the Government needs to weed out arbitrariness and ambiguity from rules and regulations.

Self-regulation needs to be encouraged wherever possible, for instance, with regard to special economic zones. This will enhance the ease and speed of doing business and thereby boost investor confidence.

The pharmaceutical/biotech sector has been neglected for far too long.

Huge opportunity

This is currently a $20 billion combined sector with the potential to grow to $100 billion by 2025.

In order to be globally competitive, the sector must be provided with incentives through a number of tax-friendly measures.

For instance, the research-oriented 200 per cent weighted average tax deduction must extend to expenses incurred on international patenting and outsourced services, including clinical trials.

This is especially relevant given that there is a moratorium on clinical trials in India. In addition, we need zero duty on all R&D imports.

Tax concerns

The pharma/biotech sector must be exempt from service tax and Minimum Alternate Tax (MAT) on exports.

The sector must also have a two-year extension on the 100 per cent five-year tax holiday to compensate for international regulatory approvals required to export.

Such regulatory approvals take an average of two years from the US Food and Drug Administration and European Medicines Agency, the US and European regulators, respectively. Domestic innovation also needs support.

All indigenously developed biotech drugs should be exempt of taxes and excise duty. And, government tenders must give a 20 per cent weighted advantage to indigenously produced drugs.

Kiran Mazumdar-Shaw is CMD, Biocon.

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