For the past 6 years, CMOs in certain regions of India have been able to operate without paying excise taxes on the products they produce, but one pharma group is imploring the government to put an end to the program.
The SME Pharma Industries Confederation is urging Prime Minister Manmohan Singh to tax CMOs operating in the country's excise-free zones, saying the program has demoralized small and medium-sized drugmakers and cost the country millions in lost revenue, India's PharmaBiz reports.
Since the program began in 2006, CMOs have flocked to excise-free zones like Himachal Pradesh and Uttarakhand, with 70% of the industry crowding a relatively small part of the country, according to the confederation. Over the years, India has reduced the excise tax on CMOs outside the zone from 16% to 4%, PharmaBiz reports, but the confederation says that doesn't go far enough, and unless the government taxes all CMOs equally, the problems will persist.
While the tax-free zones allow some companies to sell drugs at a lower cost and boost their market share, smaller companies that can't afford to expand or hire CMOs are left out in the cold, PharmaBiz reports, and, unless the playing field is leveled, many of India's mid-size pharmas will forced out of business, the federation says.
- read the PharmaBiz story