‘The budget as proposed will encourage R&D’

The budget lays a lot of emphasis on spurring growth in the manufacturing sector. The investment allowance linked to the new investments in plant and machinery are likely to benefit pharmaceutical companies also. The Government has hinted at supporting SEZs. Pharma companies setting up export units should be enthused by this intent, although the devil lies in the details.

The budget as proposed will encourage R&D. The Government has proposed to strengthen biotech clusters. Innovator companies are also likely to benefit from the proposed provision for refund of customs duty on the import of scientific and technical instruments. Investigators in clinical trial programmes may now be subjected to service tax with the exemption proposed to be withdrawn. These had been included in the negative list of exempted services. This will make clinical trials more expensive.

The Government has suggested that they will prioritise the ‘Free Drug Service’ and ‘Free Diagnosis Service’. This clearly signifies an increase in Government expenditure in the sector and create potential for demand for manufacturers.

‘Hospitals’ bottom line is sought to be protected. As an example, bio-medical waste disposal service providers are proposed to be exempted from service tax.

– Anand Mehta, Partner (Pharmaceutical and Healthcare sector group), Khaitan & Co