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Online medicine sale permitted under present law: Govt

Currently, the DIPP is in process of getting approval of Expenditure Finance Committee

Press Trust of India  |  New Delhi 

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The government on Monday said online sale of medicines is permitted under the present law and the Health Ministry will come out with a clarification which will put to rest issues between chemists and e-pharmacies.

Secretary in the Department of Industrial Policy and Promotion (DIPP) Ramesh Abhishek said there are about 50 e- pharmacies in the country and the Drugs and Cosmetics Act does not say that medicines cannot be sold online.

"...But a clarity is required on this. So what the Ministry of Health is doing is (that they are) working on issuing some clarifications which will clarify that this is allowed under the Drugs and Cosmetics Act," he told reporters here.

He was briefing the media with Commerce and Industry Minister Nirmala Sitharaman after meeting start-ups and incubators.

Brick-and-mortar chemists had raised objections against e-pharmacies, saying online sale of medicines is not allowed under the act. In some sates, police have claimed that such businesses are flouting laws.

Asked about the proposal of asking pension and insurance funds to finance start-ups, Abhishek said the DIPP already has had preliminary discussions with regulators and will take up the discussions further.

"We are going to take up formally with them. This will need tweaking of their regulations...That is a desirable objective and that is why we are pursuing that. We will continue our discussions," he said.

Replying to a question about setting up of a Rs 2,000 crore credit guarantee fund for budding entrepreneurs, the secretary said the DIPP is working on this programme and would soon approach the Cabinet for its approval.

Currently, the DIPP is in the process of getting the approval of the Expenditure Finance Committee.

During the meeting, one of the incubators raised the issue of foreign funding from an NGO coming under the purview of the FCRA (Foreign Contribution Regulation Act).

On this, Sitharaman said that she would discuss the issue with the concerned ministry.

The DIPP Secretary said the issue was raised for the first time and more details will be taken.

"This concerns only those incubators who may be covered under FCRA. We will examine this and see how we will go about this," Abhishek said.

They also suggested that like government supported incubators get tax benefit but the same facility is not available to those which are backed by state governments or private sector.

"We will examine their suggestions and will take it with the concerned departments, he said adding the issue of availability of funds to start-ups was also flagged.

Speaking on other issues, the commerce minister said that suggestions were made on 'Funds of Funds'.

Certain incubators stated that it is a time consuming process and there are also procedural matters.

She said that SIDBI, venture capitals and and angel investors will meet on February 2 to deliberate upon this issue.

Incubators also raised issues like "service tax exemption and income tax related issues, where business income classification influences tax levied on them," Sitharaman said.

She added: "Some of the public cause serving startups define business income differently from the rest of them. So how would you go about taxing those which are in the public purpose servings sphere."

The minister also asked them to prepare a list of laws which need a fresh look.

Some have raised that it might be the time for the government to review lot of such laws which are applicable to start-ups like Societies Act.

Some incubators even demand that the centre should given them grants so that they move ahead with the startup projects.

The current FCRA regulations prohibit charitable trusts from investing the foreign funds received by them in startups as such investments are treated as speculation.

Sitharaman held a meeting with various incubators and accelerators to gather feedback, hear their concerns and address key challenges faced by them.

Some suggestions that came up during the interaction included extending service tax exemption, currently provided to incubators recognised by government, to others as well and umbrella recognition of incubators, accelerators, co-working spaces and mentors as 'Startup builders'.

Startups registered with incubators need to get their valuation done, which is a financial burden on them and startups below a particular threshold may be exempted from the same, it was suggested.

Other suggestions included separate fund for incubators; and that states and municipal bodies be requested to extend relaxed procurement norms to startups.

"She assured that the department will take the suggestions forward by engaging with the ministries concerned," an official statement said.

First Published: Tue, January 10 2017. 02:05 IST