Pharmexcil urges govt to extend benefits of RoDTEP scheme to pharma industry to ensure competitiveness

New Delhi, August 20, 2021:

The Pharmaceutical Export Promotion Council of India (Pharmexcil) has urged the Union commerce and industry ministry to extend benefits of Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to drug exporters to ensure their sustainability and competitiveness in the global market.

Pharmaceutical industry has been left out of the RoDTEP scheme notified by the Directorate General of Foreign Trade (DGFT) through a circular on August 17, 2021. The scheme which replaced Merchandise Exports from India Scheme (MEIS) covered 8,555 products, with rates ranging from 0.3 per cent to 4.3 per cent.

The scheme is aimed at refunding exporters, the duties, taxes, and levies paid by them at the Central, state, and local levels.

The commerce ministry in a communication said exports of certain products, including steel, pharmaceuticals and chemicals, would not be eligible to receive refunds under the scheme as they have “done very well for themselves” without incentives since RoDTEP was aimed at targeting exports where assistance was required.

Taking exception to this, Pharmexcil requested the commerce ministry to look into the matter and notify the rates for the pharmaceutical industry at this difficult time to reiterate India’s position of “Pharmacy of the World”.

“The removal of pharma products from the list of beneficiaries under the RoDTEP scheme has come in as a great discouragement for the pharma industry. The incentives received through the MEIS scheme have kept the industry sustainable and remained competitive in the global markets, which is evident from the fact that the Indian pharmaceutical industry could contribute to the medical needs of the population and also rise to the occasion during the Covid-19 pandemic,” said Sahil Munjal, chairman, Pharmexcil.

MEIS scheme was a replacement of incentive schemes introduced in the Foreign Trade Policy 2015-20 designed to provide rewards to exporters, to emphasize India’s export interest, enhance India’s competitiveness in the world market and also to offset the infrastructural inefficiencies and associated costs, said Munjal.

“Pharmaceutical industry is a strategic industry contributing significantly to spur growth in India’s economy and it is the third largest principal commodity in terms of exports. It encompasses the contribution from large, medium and small scale industries complying to the international regulatory standards, investment in R&D and meeting these costs the companies resulting in huge expenditure at every stage,” he stated.

It is also a fact that initially companies of medium and small scale could obtain the market authorizations and do exports with the help of various incentives of the department of commerce and have now grown to large scale, resulting in the ‘Pharmacy of the World’. The pharmaceutical industry in other countries (for instance Europe, Bangladesh, China and neighbouring countries) are being incentivized by their governments for export promotion and also encouraging indigenous production to remain competitive, added Pharmexcil chairman.

The Indian pharmaceutical industry despite many hurdles has outperformed and exported US$ 24.41 billion during the year 2020-21 and is marching towards the ambitious target of US$ 29 billion set by the department of commerce/Prime Minister Office and overall target of US$ 400 billion.

At this juncture of difficult times, withdrawal of benefits to the pharma industry will be a big jolt to the industry and it will put the exporters in a disadvantageous position in the global market and thereby dent their export competitiveness, he opined.

The RoDTEP scheme is definitely going to give a boost to the domestic industry and exports providing a level playing field for the Indian pharmaceutical industry in the international market and handholding from the department in these tough times would definitely encourage the industry to put in their best endeavours and do more exports, he added.

It is essential that appropriate RoDTEP rates be provided for products exported by pharmaceutical industry also in order to sustain and provide further impetus to its export competitiveness and the exporters should not be deprived of the benefit of RoDTEP and should be placed on a similar footing as that of all other sectors, he stated.Nipun Jain, chairman of Small and Medium Pharma Manufacturers Association (SMPMA) said “The drug exporters especially MSME units are hit by a significant rise in freight rates and raw material costs in the wake of Covid-19 pandemic. They are looking for government handholding to tide over difficult times arising out of the pandemic. The MEIS scheme has provided them much needed respite. With the implementation of the RoDTEP scheme replacing the MEIS scheme, they are deprived of much needed incentives. We appeal to the commerce ministry to extend the benefits of the RoDTEP scheme to pharma exporters, especially MSMEs which will help them remain competitive in the global market.”

Upset with removal of pharma from the RoDTEP scheme, Amit Chawla, secretary, Madhya Pradesh Small Scale Drug Manufacturers Association said “Indian pharmaceutical sector is largely fueled by exports. It is the third-largest foreign exchange earner for India. Export promotion schemes such as MEIS scheme have helped the drug exporters remain competitive in the global market. It is essential that the commerce ministry should provide appropriate RoDTEP rates to pharma products exported by the industry to encourage drug exports.”

Chawla said “Though India’s pharma export performance is exemplary, MSME exporters still need assistance to ensure their sustainability and competitiveness in the global market.” medicaldialogues.in