The ongoing uncertainty over Covid-19 pandemic has tested the resilience of India’s healthcare system. More needs to be done, a survey conducted by Grant Thornton Bharat showed.
The industry expects that innovation and research & development (R&D) will be the key investment drivers. Restoration of higher percentage of deduction under Section 35(2AB) of the Income-tax Act, 1961 will encourage R&D and innovation.
The survey showed that 81 per cent of respondents expect the inclusion of pharmaceutical products in the list of eligible products for Remission of Duties and Taxes on Export Products (RoDTEP) scheme for encouraging growth of the sector in India.
RoDTEP is a scheme that is applicable with effect from January 1, 2021, formed to replace the existing MEIS (Merchandise Exports from India Scheme). It ensures that the exporters receive the refunds on the embedded taxes and duties previously non-recoverable. The scheme was brought about with the intention to boost exports which were relatively poor in volume previously.
Grant Thorton’s survey also showed that amendment of regulations around deductibility of free samples given to doctors and a lower good and services tax (GST) rate on clinical trials and research activities will also be a welcome move. More than 1,000 respondents participated in the survey across digital platforms.
Bhanu Prakash Kalmath S J, partner and sector leader-pharma & healthcare, Grant Thornton Bharat said, “India’s pharmaceutical industry has played a key role in the global fight against the pandemic. Enhanced outlay under the PLI schemes and encouraging exports and research & development will further advance the ‘Make in India’ vision and consolidate our position as a leading pharmaceutical supplier.”
The survey highlighted that R&D or innovation will attract highest investment in the sector in FY23. It is followed by active pharmaceutical ingredient (API) capacity and capability expansion, manufacturing of vaccines, biopharmaceuticals and medical devices.
Anurag Singh, managing director of a consulting firm Primus Partners added that a combination of high-impact schemes have been put in place for pharma-sector recently, including PLIs for pharma, key starting materials (KSM), API, medical devices, scheme for promotion of bulk drug parks, medical device parks, etc. The net impact of the pandemic and supply chain disruptions in China have been favourable for the Indian pharma sector.
“We expect some non-fiscal support to be provided in addition to already available support-measures, to make best of the growth opportunity. The industry is keen on getting more support for R&D spends through fiscal (eg, Higher tax deduction on R&D spend) and non-fiscal support,” Singh added.
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