‘It is a responsible budget’
We were hoping the budget would breathe some life into the economy. The expectations of a big bang announcement to restart the economy were belied – expectations were high. Given what the market was grappling with there is a dearth of big ideas. On the other hand it is a responsible budget given the fact the fiscal deficit is being brought down from 5.3 per cent to 4.5 per cent.
The allocation of Rs 37,330 crore to the Ministry of Health and Family Welfare is welcome, particularly the increase of 24.5 per cent over the revised estimates for the new national health mission.
Innovation seems to have got some attention with the setting up of the Indian Institute of Biotechnology at Ranchi and the allocation of ` 200 crore to the Ministry of Science and Technology to help scale up innovations and make them available to the people.
– Ranjit Shahani, President OPPI and Vice Chairman and Managing Director, Novartis India
‘GST is critical to reduce waste’
The budget has promised Goods and Services Tax (GST) which is a good sign but that promise began five years ago. We should execute these policies quickly which reduces transaction cost and makes the economy efficient.
For the pharma industry GST is critical to reduce waste. The investment in science and technology is a long awaited move.
The lack or reference to retrospective tax was disappointing. Reducing the fiscal deficit is vital for the economy. The pharma industry looks forward to growth in the economy.
– Dr Swati Piramal, Director, Piramal Healthcare
‘Impact is neutral on pharma sector’
The overall impact of this budget on the Indian pharma industry is neutral. We haven’t seen any changes announced in the excise or customs duties of formulations or bulk drugs. On an average, the excise duty is four per cent higher on APIs (active pharmaceutical ingredients or bulk drugs) than on formulations. Since APIs attract higher excise duty compared to the formulations, this leads to accumulation of credit which is a cost to companies. We were hoping that this budget would provide a solution by way of a refund mechanism for the unutilised credit. In addition, India is an attractive cost efficient destination for drug manufacturing and the government needs to provide an impetus to such activities in the form of tax and fiscal benefits. Currently, the only tax benefit available for R&D activities is in the form of weighted deduction for in-house R&D. The government could have helped the industry by expanding the tax benefit to all R&D expenses including contracted R&D.”
– Krishna Prasad, Managing Director, Granules India
‘Proposals are conducive’
I welcome the Union Budget 2013-14, since it is growth and investment oriented. Increased expenditure on healthcare and healthcare infrastructure will boost our industry, create employment and benefit citizens. The budget proposals are conducive for the growth of India’s healthcare sector as they focus on inclusive and sustained development. Of particular benefit is the 24.3 per cent increase in the National Health Mission Programme. Commendable initiatives have been taken in critical areas such as investment in manufacturing and infrastructure, MSME growth and capital market development. Furthermore, the enhanced focus on investing in more AIIMS like institutions and increased skill development are positive initiatives which also increase opportunities for India’s youth.”
– Kairus Dadachanji, Managing Director, SCHOTT KAISHA
‘Not much has been allotted’
Not much has been allotted 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 per cent over the 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. The increase in surcharge from five to 10 per cent and increase in royalty rates of tax from 10 to 25 per cent (subject to double tax treaty relief) will impact the pharma sector negatively. Finally the excise duty on MRP basis (with abatement of 35 per cent) for ayurvedic, unani, bio chem, siddha and homoeopathy 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.
– Hitesh Sharma, Partner and National Leader—Life Sciences, Ernst & Young
‘Less attention towards healthcare sector’
In our pre-budget memorandum, OPPI proposed budgetary/ fiscal measures and support in the following five key areas:
- Infrastructure building
- Improving access to medicines
- Reduction in transaction costs
- Incentivising R&D
- Reduction in tax burden and other measures
Unfortunately, there is nothing significant in this budget for the healthcare sector, as such.
- Setting up of Indian Institute of Biotechnology
- Allocation of fund for products based on science and technology innovations
The industry also expected that Government will take measures to make all imported life-saving drugs more affordable to the patients by eliminating the import duty. Unfortunately, this has not happened.
Thus, in our view, the healthcare concerns of the country have not been given adequate importance in the Union Budget proposals for 2013-14 to help improving the healthcare needs of the nation.
– Tapan Ray, Director General, Organisation of Pharmaceutical Producers of India
‘No specific incentives’
The finance minister should be lauded for presenting a growth-oriented and balanced budget especially given the precarious state of the country’s finances. The focus on rationalising expenditure has definitely helped in controlling the fiscal deficit. Though we still remain on a sticky wicket, he has realised this fact and his effort has been to try and get us back to the six per cent plus GDP growth. While the direction seems right, it still remains difficult for India to achieve the high eight per cent GDP growth in the near future.
For long the Budget has been a non event for the pharma sector in particular and Union Budget 2013-14 is no exception. Hence, we were not surprised when there were no specific incentives were announced for the sector. Even for the healthcare sector, there were no recommendations in particular.
– Glenn Saldanha, Chairman & Managing Director, Glenmark
‘No specific measures for biotech industry’
The budget focuses on poverty alleviation, rural development and employment generation. It also focuses on increasing investments in the economy, which can alone drive development and growth. It aims to control fiscal and revenue deficits without resorting to higher taxation, which is really welcome. As far as the industry is concerned, the major benefit is the 15 per cent investment allowance on plant and machinery for investments above Rs 100 crores. Increasing outlays for skill improvement for National Skill Development Corporation and more funding for SIDBI for MSME funding are practical measures. There are no specific measures to benefit the biotechnology industry or the vaccine industry in terms of tax exemptions or benefits. However, increased outlay for health and agriculture in general and specifically for the Rashtriya Krishi Vikas programme and the new National Livestock Mission will have spin off benefits for our industry.
– KV Balasubramaniam, Managing Director, Indian Immunologicals
‘Nothing particular for pharma’
The Union Budget 2012-13 was more of a social budget. With majority of the reforms being targeted at three key sections of the society viz., women, youth and poor. Steps like Rs 2000 tax credit available to tax payers in the slab of Rs 2 lakh to Rs 5 lakh and additional tax relief of Rs 1 lakh for the first time home buyers who avail loan of Rs 25 lakh would surely provide more disposable income in the hands of people. Finance Minister had very little to offer for the corporate sector and nothing for pharma sector in particular. Budget remained silent on reforms in pharma sector like reduction in tax and excise duties on life saving drugs and increase in the tax deduction for in-house R&D expenditure undertaken.
– Dr B Arvind Shah, Managing Director, Arvind Remedies
‘Maintaining a healthy environment’
This budget is clearly a response to the prevailing socio-economic circumstances in the country. The Finance Minister has put forward a peoples’ budget. The most reassuring aspect of the budget today is the Finance Minister’s acknowledgement of the criticality of continued inflow of foreign investments for augmenting the country’s growth.
The focus is clearly on the imperative of maintaining a healthy environment to mobilise it. The Finance Minister has also done well to place continued emphasis on the infrastructure sector, particularly, social infrastructure, which is really the need of the hour.
– Deepak Kapoor, Chairman, PwC India
‘We welcome the Union Budget’
ABLE-AG welcomes the Union Budget. We strongly believe as we sharpen our focus on sustainable food production and its supply, technology shall play a pivotal role. The Indian Institute of Biotechnology and National Institute of Biotic Stress Management are also steps in right direction and reflects commitment of government in investing in technology. The incubation projects in universities passing as CSR activities will encourage investments in biotech projects is also a step in the right direction.
– Ram Kaundinya, Chairman, ABLE-AG
‘Nothing specific for pharma sector’
Budget is indeed not on the expected lines as industry was waiting for impetus. However, it is heartening to note that the Finance Minister is able to maintain the fiscal discipline which may be healthy for the economy in the long run. Particularly appreciative is the fact that subsidy bill is curtailed. This should help in bringing the lower interest regime back in the country.
There is nothing specific for pharma sector, however, a robust allocation of budgetary support to the healthcare sector shall augur well to improve healthcare in India. The actions imbibed in 24 per cent increase in budget allocation, separate allocation for medical education, training and research, national programme for healthcare for elderly and support for six AIIMS like institutions would pave a good path for healthcare.
Being a research-driven company, it is pleasant to note that Finance Minister has also touched on science and technology and has initiated good allocations. We would like the innovation scenario in the country to improve at a much faster pace.
The revival of investment allowance is welcome, however, it would have been better if a lower limit of investment would have kept. Investing Rs 100 crores into plant and machinery may not be feasible for a mid-size firm.
– Pawan Chaudhary, CMD, Venus Remedies
‘Pharma sector has received scant attention’
The FM’s directional intent is good and the investment signals are positive. However, implementation and fiscal prudence still remain a concern. Bolder measures could have been taken to kick start growth as projected in the National Economic Survey. The surcharge on high income earners was anticipated and is in fact, necessary. The focus on skill development through a special fund for the youth along with the provision to recognise corporate investments in technology incubators as CSR, will favour self-employment and entrepreneurship. The plethora of incentives for women and the proposed allocation for a women’s bank and the Nirbhaya fund are welcome but will have a limited impact on the overall economy. The manufacturing sector has not received the impetus it deserves — the 15 per cent investment allowance is inadequate. Food and fertiliser subsidies are underprovided. The pharma sector has received scant attention. Overall a positive budget which may not deliver the intended >6 per cent growth.
– Kiran Mazumdar Shaw, CMD, Biocon
‘Small token to the SMEs and mid-cap companies’
I am happy that the only proactive fiscal step towards the sector, as a small token to the SMEs and midcap companies like OSCL was that the Union Budget 2013-14 announced a petite entitlement of investment allowance of 15 per cent on companies investing Rs 100 crores or more in plant and machinery between April 1, 2013 and March 31, 2015, in addition to the current rates of depreciation.
– Omkar P Herlekar, Whole-Time Director, Omkar Specialty Chemicals
‘The wait shall be longer’
The pharma industry is under tremendous pressure in terms of costs. Moreover, there is inverted duty structure, representations have been made from many organisations to address the issue i.e. API’s have 12 per cent and formulations have six per cent duty.
In this budget we were looking at the issue been addressed by the Finance Minister but the wait shall be longer. Many units have crores of rupees stuck which could have been used as working capital in order to reduce the interest load burden.
– Bhavin M Mehta, Director, Kilitch Drugs
‘Excise duty has been increased’
On first reading and understanding, I feel it is a detrimental budget for the Ayurveda, Yoga ,Unani, Siddha, Homeopathy (AYUSH) sector as excise duty has been increased from earlier base of whole sale price less 40 per cent post manufacturing expenses to six per cent on MRP. This will result in increase in the prices of AYUSH products which are consumed by mostly rural masses in our country.
– Shashank Sandu, Executive Director, Sandu Brothers
‘Overall impression of the budget is not path breaking’
The Union Budget for 2013-14 is not encouraging for the biotech sector as proposed by ABLE on behalf of the industry. Although some measures are announced, overall impression of the budget is not path breaking and is not sending the right pointers for quick growth of this sector as there are no major incentives announced by the government.
While the finance minister has recognised the importance of venture capital and tax incentives, the measures announced are far from being adequate to build strong venture capital funds for the sector.
We have to study the implications of the tax rebates and funds allocated for advanced skills development. From outside one is not able to put any numbers on to this.
Exemption from excise/custom duties on life saving medicines, as well as on their raw materials and exemption on capital goods and consumables, CRO’s, diagnostic kits have not been considered. Somebody has to realise that these are important parts of healthcare sector. Also, there has been no measures providing tax holidays or soft loans to this sector.
The heartening fact is that the plan outlay for science and technology has increased and there are some announcements in the agriculture area where two new biotech institutes are coming up. More outlay to AYUSH is certainly a good step in the right direction.
– PM Murali, President, Association of Biotechnology Led Enterprises (ABLE)
‘It has been a very lopsided budget’
An industry that has grown from being fully dependent on foreign companies a few decades ago to being an indigenous entrepreneur-driven industry with over Rs 64,000-crore market today, an industry that has over 10,000 small and medium enterprises and about 300 large enterprises all over India, an industry that provides over 64,000 safe and efficacious medicines at affordable prices, an industry that provides employment to over 40 lakh people, an industry that has contributed significantly in improving the standard of life and life expectancy, bringing down the death rate and infant mortality rates etc. of our people, an industry that our Government is very proud to showcase to the world as ‘Pharmacy of the World’, an industry that has earned the respect, admiration and dependence of all countries of the world for providing safe, efficacious, affordable quality medicines – has been completely ignored in the Budget.
The pharma industry has been facing problems of huge CENVAT accumulation due to the inverted duty structure resulting in blockage of working capital and affecting competitiveness in international market and this needed to be addressed urgently. Considering the long-term benefits of R&D to the economy at large, all excisable goods used for R&D purposes should have been exempted from excise duty as also import of all Capital Goods to boost our R&D activities to produce and provide our people with the latest more therapeutic medicines, exemption of physician samples from central excise duty, and reduction of customs duty on all life-saving drugs, etc.
The Indian pharma industry has always responded to the urgent calls of our Government, both in Centre and in States, in times of disaster and natural calamities by providing free medicines anywhere in India, without minding the production costs and expenses involved in reaching the medicines to those affected victims. It is sad that despite our repeated requests and representations, the Government continues to tax these voluntary free medicines by imposing excise duty and sales tax on them.
It has been a very lopsided budget, in that investment allowance @ 15 per cent has been allowed to manufacturing companies that invest more than Rs 100 crores in plant and machinery in the next two years. Most of the manufacturing industries in India are small scale driven, with even our Prime Minister calling them ‘engines of growth’. How many companies can invest ‘more than Rs 100 crores’? It effectively blocks lakhs of MSME units in India, not to mention over 10,000 units in the pharma industry from availing of this benefit. The 12th Five Year Plan in the report on MSME sector states that it is the “major base of manufacturing sector in India, with its contribution of over 45 per cent in the overall industrial output and calls for “substantial enhancement of plan allocation for the sector during the 12th Plan to address major bottlenecks facing the sector.”
No wonder many in the Indian pharma industry now feel that it is a futile exercise to spend time and effort providing our pre-Budget proposals for drafting the Union Budget year-after-year, as the Finance Ministry has been ignoring the industry time and again in the last few budgets.
– Daara B Patel, Secretary-General, Indian Drug Manufacturers’ Association