Updated on 5 March 2013
Indian pharma and biotech sector cry foul after 2013 Union Budget
There is little to cheer for the pharmaceuticals and biotechnology industry in India's Budget for 2013-14, unlike the agricultural sector that got a boost of 22 percent in allocations. The pharma and biotech industry associations in the country have long been demanding some relief but no significant measures were announced even as the country's finance minister, Mr P Chidamabaram, presented the Union Budget in Parliament.
The biosciences industry has been demanding tax relief in the form of weighted tax deduction on R&D expenditure to provide a push for such activities in the country and reduction in customs duty on imported medical equipment.
Dr GSK Velu, founder and MD, Trivitron Healthcare, while speaking about the budget said that, "This is another year in which the health sector has been ignored by the government. The healthcare domain wanted status similar to that given to the infrastructure sector, including incentives for local innovation and manufacturing in the medtech industry and higher tax exemption for annual health checkups to achieve the 'Health For all by 2020 Objective'. However, the entire health sector has been ignored with marginal budget allocation increase in the government spending on healthcare. Overall, this was a disappointing budget for the healthcare sector"
Reacting to the budget announcement, Mr Hitesh Sharma, partner and national leader, life sciences, Ernst & Young, India, commented that there was not much for the pharma or the healthcare sector in the budget. "Directionally, the government has shown the commitment towards the healthcare sector by increasing the spend for National Health Mission by 24 percent over RE of last year. Also the continued focus on medical education and training (including through AIIMs) is positive. Otherwise no other direct support has been provided in the Budget to the sector," he said.
The Union Budget has proposed $6.8 billion (Rs 37,330 crore) allocation to the Ministry of Health and Family Welfare. Also, $869 million (Rs 4,727 crore) has been proposed for medical education, training and research in the country.
Pointing out the negatives in the budget, Mr Sharma said that the increase in surcharge from five percent-to-10 percent and an increase in royalty rates of tax from 10 percent-to-25 percent (subject to double tax treaty relief) will impact the pharma sector negatively. "Finally, the excise duty on MRP basis (with abatement of 35 percent) for ayurvedic, unani, bio chemic, Siddha and Homeopath medicines, aligns these areas with the present regime for the pharma sector. Most demands of the sector like tax holiday period increase for healthcare, GST roll out, service tax exemption for clinical trials activity, etc have not been addressed in the budget," he added.