Financial Daily from THE HINDU group of publications
Saturday, Mar 01, 2003
Industry & Economy
Corporate - Reactions
Pharma sector hails sops
MUMBAI, Feb. 28
FOR pharmaceutical and biotechnology companies driven by research and development, the Union Budget 2003-04 seems to be a good one especially as India will now be promoted as the global health destination.
The sops include, drugs and materials imported or produced domestically for clinical trials being exempt from customs and excise duties and the tax holiday for R&D extended up to March, 2004. Mr Kewal Handa, Finance Director, Pfizer Ltd, said that "it is overall a positive budget for the healthcare industry. The real surprise came with the decision to exempt drugs used for clinical trials. Contract Research Organisations (CROs) will greatly benefit from this exemption apart from other research driven companies."
Biotech industry has been given a further lift in the form of export restriction of Rs 20 crore being removed. "The abolition of export obligation of Rs 20 crore for biotech and R&D companies is a step in the right direction," Mr I A Mody, Chairman, Cadila Pharmaceuticals, said.
The concessions that have come in indirectly from other sectors such as insurance and biotechnology have also immensely benefited pharma majors. Mr D B Gupta, Chairman, Lupin Group, said, "For pharma companies the most important positive benefits would be as an indirect result of all the concessions being offered to the healthcare industry as well as the new medical insurance scheme for masses announced by the Finance Minister.''
Diagnostics or medical equipment manufacturing companies got a fillip with a reduction in customs duty on specified life saving equipment from 25 per cent to 5 per cent, and also exemption from CVD (additional duty of customs).
Mr Habil Khorakiwala, Chairman, Wockhardt, is of the view that "enhanced rate of depreciation will not only bring fresh investment but will also benefit modernisation of hospitals.
The benefit under Section 10(23)G will provide access to long-term investment requirement for hospitals and biotechnology.''
The domestic pharma industry is now expected to grow significantly higher with these sops in place.
Mr J.B. Mody, Chairman and Managing Director, J.B. Chemicals and Pharmaceuticals Ltd, said that the pharma industry which is growing at 8 per cent will see much faster growth due to the general health insurance scheme, hospital scheme and certain encouragement given to exports.
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