As the budget of 2020 was presented by the finance minister on February 1st, many changes in taxes of pharmaceutical companies were announced. The pharmaceutical and healthcare sectors have requested the finance minister to raise the spending on healthcare in proportion to GDP. Dr. Azad Moopen-Founder Chairman & Managing Director, Aster DM Healthcare suggested that Indian budget should focus more on increasing public spending on healthcare and increase the percentage from 1% to 2.5% of cost spend from GDP on healthcare.
The industry also wishes that the government should introduce provisions in the budget to promote the establishment of the country’s bulk drug manufacturing units, in addition to the scale-up of health care expenditures.
The pharmaceutical industry wants the government to restore the tax benefit offered on research and development expenditure in the upcoming Union Budget.”India must move from predominantly branded generic drugs to discovering and developing new drugs; for that the government should resume tax exemption of 200 percent on R&D,” said Sudarshan Jain, Secretary General of Indian Pharmaceutical Alliance (IPA). While the tax incentive isn’t specific to the pharma industry, they have been major beneficiaries as they have increased their average R&D spend from 5.3 percent of revenue in FY12 to 8.5 percent in FY19.
The government had to cancel MEIS, because it did not comply with WTO rules. The pharmaceutical companies were significant beneficiaries of the program. India’s pharmaceutical exports rose by 11 per cent in 2018-19 to $19.2 billion. To give fillip to exports – IPA said the government should announce a new scheme of export incentives or subsidies in place of the now scrapped Merchandise Exports from India Scheme (MEIS) to promote pharmaceutical exports.