Biotech industry pushes for fiscal sops, duty exemption

I / Bangalore February 16, 2010, 11:07 IST

India's biotechnology industry is pushing the Government for fiscal incentives, import duty exemption and correction of policy that gives MNCs higher drug prices than "desi" producers, ahead of the Union budget.

Industry officials said the Indian biotech sector has a unique opportunity to build scale and leadership in manufacturing and Research and Development.

"We therefore need import duty exemption on equipment and instrumentation", biotech veteran and CMD of Biocon, Kiran Mazumdar-Shaw told PTI.
 
The industry also needs 200 per cent weighted average tax deduction on all R & D and patenting costs, she said.
 
"Currently we are allowed 150 per cent weighted average tax deduction and only covers domestic patenting costs. This is short-sighted in view of the fact that international patent filings are key to the biotech sector", she said.
 
Officials in the sector has also called for fiscal incentives such as sales tax and excise duty exemption for a five year period from the date of commercialisation.
 
Mazumdar-Shaw said indigenous biotech products must have more favourable terms than MNCs who enjoy higher prices from National Pharma Pricing Authority (NPPA) and cross subsidise their tender prices as a result. "Only India has such a skewed policy that acts against its own industry!", she quipped.
 
Another important requirement for the industry was adoption of Clause 10AA of the SEZ Act with retrospective effect. This was a long-standing issue yet to be resolved, she said.

Mazumdar-Shaw said that the "Minister of Finance needs to send the right signals to the industry, which feels duped in terms of promised SEZ benefits".
 
According to her, the Finance Minister admitted committing an error when rolling out the SEZ policy and took corrective action but prospectively - this is unfair to those who invested in setting up manufacturing SEZ like Serum Institute of India and Biocon (India's top two biotech firms).
 
"This has prompted Biocon to opt for overseas operations that offer better investment terms -- example Malaysia", she said.

The agri-biotech/seed industry, in the meantime, has concessional funding for infrastructure development, concessions on cost of deregulation of GMOs (genetically modified organism) of national importance, and service tax, VAT and tax holiday.
 
The industry urged the Government to consider making funds available at nominal interest rate on long-term basis to seed companies to invest in creating bio-tech based R&D facilities.
 
"Such loans may be categorised under the priority lending sector/agricultural loans so as to encourage banks and other public financial institutions to give more focus to this sector", the immediate past President of the Association of Biotechnology Enterprises (ABLE) and Managing Director of Metahelix Life Sciences, K K Narayanan, said.
 
"To promote the agri-biotech R&D investments, Government may also consider income-tax holiday for ten years on the lines similar to IT industry", he said.