Cloud On Depb Costs Pharma Firms Rs 200 Crore

The pharmaceutical industry is losing approximately Rs 200 crore due to the customs authorities passing the export orders on a provisional basis. This makes it difficult for the industry to claim the Duty Exemption and Pass Book scheme (DEPB) benefit.

Pharma companies see a big opportunity to export ciprofloxacin in the wake on the anthrax cases in the US. Along side there are World Health Organisation (WHO) and United Nation orders for drugs. "It becomes difficult for us to put in competitive bids as there is no guarantee whether we can avail of the concessional scheme," said an export-in-charge of a company.

The last meeting of the DEPB committee, convened on the 24th of September, had instructed the port authorities to follow the exim policy for value cap norms as the issue is still pending review in Delhi. The minutes of the meeting say that the DEPB committee has taken a decision to allow duty exemption on flat rate for formulations and there should not be any value cap.

In case of relief measures announced for exporters to enhance exports, value cap was to be done away with from October 4 2001 till March 31, 2002. However, this measure has yet to be notified by the ministry. Industry sources claim that this has resulted in a status quo for exporters.

The drawback directorate of the department of revenue continues to boycott weekly meetings of the DEPB committee. Several organisations have joined hands to claim the DEPB benefits. The list now includes Indian Drug Manufacturer's Association (IDMA), Bulk Drugs Manufacturers Association, Department of Chemicals and Petro Chemicals and the Indian Pharmaceutical Alliance (IPA).

In May 2001, the department of revenue indicated to the customs officials that since formulations have a fixed 70 per cent of their value of the bulk drug used in its manufacture for reimbursement, exporters were misusing this facility.

Currently all pharmaceuticals shipments are being cleared on a provisional basis, making them ineligible for the DEPB. Companies are crying foul as notwithstanding DEPB committee clarifications and corrected interpretations of the Exim policy, the customs authorities still desist from adhering to the value cap norms.