- ECBs to be allowed for cold storage facilities including farm level pre-cooling.
- A bill providing for establishment of “National Biotechnology Regulatory Authority” (“NBRA”) is expected to be introduced soon in the Parliament. The NBRA would regulate the research, manufacture, importation and use of genetically modified organisms and products derived thereof.
- New duty rates:
|1.||Basic Customs Duty (“BCD”)
||5% (from 7.5%)
|2.||Additional Customs Duty
|3.||Special Additional Dutyon goods required for medical, surgical, dental or veterinary use and parts & accessories thereof.||Exempted|
|5.||Excise Duty – Goods covered under the Medicinal & Toilet Preparations Act. Further the rate on API has also been increased by 2%, which would marginally increase the input cost for the Pharma companies.||10% (from 16%)|
||7.5% (from 10%)
200% (from 150%)
The budget announcement with regard to charging a nominal rate of customs duty and the exemption from service tax on the allied sectors to food processing are definitely a step in the right direction. Further, the increase in R&D deduction will incentivize the Pharma companies to increase their expense on R&D and in turn accelerate the growth momentum. These incentives will definitely spur the growth momentum of the already fast-emerging medical devices and equipment sector in India. Some tax incentives for the business of setting up and operating “cold chain” infrastructure, which is an integral part in the logistics for vaccines and many biotech products, have also been announced. The government definitely needs to revisit the strategy adopted to promote food parks as presently, out of the total fifteen proposed food parks, only two have been established and are not 100% functional. Further, the government must take drastic steps if it desires to establish all mega-food parks with full functionality by 2015. The increase in MAT is also likely to have a negative impact on companies as all companies claim MAT credit, increasing margin pressures considerably, and the rise in excise duty will result in increased input costs for drug companies.
Food & Pharma Team