The Organization of Pharmaceutical Producers of India (OPPI) has demanded that the federal government scrap the customs duty of 5 per cent levied on certain life-saving drugs.
In the budget presented to the Indian parliament in February last, Finance Minister P.Chidambaram had proposed a five per cent tax on new life-saving drugs. The older ones were not touched, though.
In a memorandum submitted to the government, the pharmaceutical industry has argued that when added to the education cess and other special duties proposed in the budget, the 5 per cent tax could actually translate into 9.4 per cent.
In the end a host of new life-saving drugs would become that much costlier. Hence it calls for the new levy to be repealed forthwith.
In its memorandum, the OPPI, an organization of major pharma companies, also suggests that the R&D incentives to the industry be continued up to 2017.
The budget had proposed to stop them by 2012 itself. As R&D is long process, it needs to be extended for at least another 10 years, the OPPI said.
The industry also wants the government to exclude from the purview of the Fringe Benefit Tax (FBT) the expenses incurred by the pharma companies while hosting scientific and technical conferences for doctors and sales personnel.
The FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees, in addition to the cash salary or wages paid. It was introduced in India in 2005-2006.
The pharmaceutical industry says that the expenses incurred on conferences for doctors or company sales personnel confer no benefit on the employees of the sponsoring firms.
Whether doctors or sales personnel, they are outsiders and hence the drug companies should not be burdened with the FBT, the memorandum pleads.