Budget Expectations: Pharma Producers body calls for infra status to healthcare

By Ranjit Shahani

As 16 March draws close, Indian healthcare is once again at the crossroads waiting with bated breath for the Union Budget in the hope that it will provide the necessary impetus to the pharmaceutical industry. Announcing Infrastructure status for Healthcare would be just what the doctor ordered. The reality is that rural and semi-urban India lacks even the most basic healthcare infrastructure. Since setting up facilities in such areas involves substantial investments with long gestation periods, tax incentives are imperative. A weighted deduction for expenditure incurred in rural/semi-urban areas is therefore required. Other areas needing incentives include: Research & Development: Presently, only weighted deduction for in-house R&D is allowed, without specific tax benefits for units engaged in R&D or contract manufacturing. Since both activities are pivotal growth drivers, tax breaks are indispensable to accelerate growth and make India an attractive R&D and contract manufacturing hub. Benefits for such units can be provided via deduction from profits linked to investments, which includes permitting research tax credits to offset future tax liability. With weighted deduction only available for expenditure on in-house R&D facilities, it ignores the fact that Indian companies incur immense expenses on NCE (new chemical entity) and other filings with the US FDA. Since pharma discovery research entails a lengthy, risky and expensive process, provision should specifically be made for weighted deduction vis-