Govt may roll back customs duty hike on life-saving drugs

  • Himani Chandna and Timsy Jaipuria, New Delhi
  • Updated: Feb 15, 2016 01:04 IST
Faced with criticism over raising customs duty by up to 35%on some life-saving drugs, the government is now examining to roll back the move. (Representative image)

Faced with criticism over raising customs duty by up to 35%on some life-saving drugs, the government is now examining to roll back the move.

In a notification dated February 2, the Centre announced withdrawal of the exemption on customs duty on certain bulk drugs, including those used to treat parkinson’s disease, heart failures, HIV and cancer. This will increase the duty by 5% to 35%.

The move caused a lot of furore, forcing the Prime Minister’s Office (PMO) to intervene. Last week, the PMO held a meeting with top officials of the department of pharmaceuticals (DoP), revenue and health ministry, to review the decision of doing away with the exemptions.

“We have highlighted that the list includes many life-saving drugs, and we are expecting a step forward soon. On February 9, the PMO held a meeting, and discussed the possibilities of restoring the tax sops,” a senior DoP official said on the condition of anonymity. “While the government’s idea is to restrict the import of bulk drugs and encourage domestic manufacturers to make in India, it may hamper the government’s attempt to provide low-cost and effective healthcare.”

“Both the health ministry, and the DoP are now engaged in an impact assessment, and will soon present their concerns,” a health ministry official said.

Confirming the ongoing assessments, a revenue department official said: “If they want any revision, they can come to the finance ministry with their views.” However, the department is clear that if at all any revision occurs, it would be on selected few drugs, and not all 76, he said.

Bulk drugs such as cefoperazone, carbidopa, dobutamine, ketamine and letrozole, used as basic components to produce medicines to treat parkinson’s disease, heart failures, hallucinogen and cancer, will now attract a custom duty of 10% instead of 5%. The government has also increased customs duty on certain life-saving drugs, including abciximab, anti-rabies immunoglobin, procarbazine and saquinavir, from nil to 35%. Most of the bulk drugs in these categories are used for the treatment of cancer, HIV and cardiac shocks.

Pharma companies are also disappointed by the move.

“We were not consulted at all. The decision needs to be re-visited,” said Ranjana Smetacek, director-general, Organisation of Pharmaceutical Producers of India, the biggest lobby representing foreign drug firms in India.

“The withdrawal of exemption pertains to customs duties, which will impact imported drugs and those made in SEZs,” Kiran Mazumdar Shaw, CMD, Biocon, had tweeted earlier.

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